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Would BMW benefit if the UK government took us into the Euro by January 2004?

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Introduction

Would BMW benefit if the UK government took us into the Euro by January 2004? Introduction In this piece of coursework, I have been asked to research a business, in this case I have chosen BMW and see if they would benefit if the UK government took us into the euro by January 2004. To answer this question, I am going to use various sources (e.g. the Internet, newspaper articles, etc.) to research the British part of the BMW company, their finance system to see if they can cope with a change of currency and send a survey through e-mail to see what the managers and employees think about the situation. If BMW is a successful firm I can't see a change of currency affecting them in any way. Hypothesis When this piece of coursework is complete, I expect to find that BMW would benefit from the government's decision to take us into the euro by 2004. Because BMW is a successful business, with a more than capable financial system, I think that BMW will either not be affected or they will see an improvement in sales because of the conversion rate from the pound against the euro. Desk Research The euro is popular with some businesses because it: * creates stability, so levels of uncertainty are reduced, * reduces transaction costs because all deals ...read more.

Middle

The second trade-off is the constraint on economic policy. Once in the euro zone, a country must conform to certain macro-economic objectives. This may create difficulties for countries which are out of line with the rest. The political agenda may prove to be a stronger driving force than the economic one. Until the currency is more firmly established, it is difficult to tell whether the gains will outweigh the losses for any particular country. Field Research BMW is a major UK employer, with its UK sales and marketing operations at Bracknell, Berkshire, production plants at Hams Hall, Warwickshire, Swindon, Wiltshire and Oxford and Financial Services company in Hook, Hampshire. In January 1994 BMW acquired the Rover Group from British Aerospace. The two companies retained their separate identities, whilst reinforcing the integrated global nature of the BMW Group's presence the world over. Between them, the two companies produced over one million vehicles a year. Despite enormous investment of �3 billion in the Rover Group, its people, production facilities and new models, a combination of downward price pressure, the strength of the pound and lack of consumer confidence in the Rover brand led to continued losses - over �2 million a day in early 2000. With mounting losses and no likelihood of change in the situation it became clear that alternative courses of action to secure the future of BMW were required. ...read more.

Conclusion

Dealerships in the UK will only switch direct to euro pricing when and if the Government make the formal decision to join. BMW (GB) Ltd will then switch to handling all transactions in euros at the same time. However, any customer can pay in euros in the same way as they have been able to pay in any currency in the past. The invoice value would be converted using the daily exchange rate. The euro has no influence whatsoever on BMW pricing policy - so the introduction of the new currency will not make BMW products or services either cheaper or more expensive. Conclusion From the research and the results I have collected, I have come to the conclusion that the introduction of the euro will have no effect on BMW whatsoever, the prices of their products and services will not be cheaper or more expensive, there fore the company will not benefit and will continue to run the business as it was run before the introduction of the single currency. Because the company is financially prepared for the introduction of the euro, it is the company policy not to offer a dual pricing system in the UK because they have not joined the euro currency. Dealerships in the UK will only make the switch to euros when the government decides to join. ...read more.

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