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Rover produced its first car in 1904, and became the backbone of the British car industry. The downfall of Rover began in the 1970ís when continuous work disputes ruined the brand image of the company. British Aerospace bought the troubled company in 1988, for a price considered below value and then BMW the bought the company in 1994 for £880 million. Which leads us to where we are now, the company is again in trouble and BMW are very eager to sell the company. The two companies interested in the company are Phoenix and Alchemy. In this report I will explain each of the two proposals, weigh up the pros and cons for each and then evaluate the situation and whether the right choice was made by Phoenix who ended up buying the company for only £10.
Initially BMW wanted to integrate the Rover brand into its lower priced car market and the main aim of BMW was to produce affordable and quality cars with a good brand image. It also purchased Rover mainly for its two well-known and highly profitable marquees, Land Rover and MG.
The situation at Rover became so bad they have started to lose in excess of £2 million per day, and this amounted to losses of £647 million in the trading year of 1998. The following year wasnít much better either, in fact the situation worsened with a 26% sales decline and more losses of £600 million. The situation for the workers of the companyís famous plant Longbridge looked bleak also when it was announced that 9000 jobs would be shed.
Many reasons were given for the decline. The main reason was the company alienating profitable niche markets, such as the Metro and making an attempt to bring the brand up market, but as a result of bad management they had no replacement cars to offer to the market they desired. Another reason was BMWís apparent lack of confidence in the brand name and image, which led to the publicís view of the company image declining. BMW also failed to chase profitable fleet sales, which is selling a lot of cars to one person or company.
With the decline, the Government stepped in to offer to help the troubled company because of the effect the situation could have on not only the local but national economy. The main reasons that they were worried were a lot of people would become unemployed in the areas around the car plants. This would lead to them not paying taxes because they are out of work; also benefits would have to be paid to these people. There were three main options for the Government when helping them. These were firstly, to subsidize the company, which means give the company money to keep running. The advantages of this are that the company would continue to trade and so the jobs would be saved. Also this is a long-term solution because the government could condition the lending of the money for example they could say that they would give the company money in exchange for the safety of the workers jobs. The disadvantages are that taxes would increase to come up with these subsidies and maybe it wouldnít be worth the government providing the company because it is a lost cause. Also other companies may see this and feel it is unfair. It could also cause inefficiency in the plants because the workers may feel that the government will bail them out every time they are in trouble. Secondly, the government could nationalize the company, which means that they would buy the business. The advantages of this are that all the jobs would be safe and the business keeps on trading, also the profit would go straight to the government. The disadvantages are that it would cost a lot to buy and this would come from taxes. The company may still be unprofitable and quality could decrease because of lack of incentive on the governmentís part. Finally the last solution is to help the company find a new buyer. The advantages of this are the business survives, the taxpayer money would be saved, no government would be needed, there is a better chance of success and the plants would be saved. The disadvantages are buyer would have an unprofitable business, less government control and the company may wish to downsize the company.
The government decided that the best cause of action would be to help BMW find a new buyer. The two main candidates were Alchemy and Phoenix and these two companies put forward their plans for Rover.
Firstly, Alchemy, their proposal was to rid the company of the unprofitable sections and keep the sections of the business that made profits for example Range Rover and MG. The advantages are that by ridding the unprofitable sector greater reinvestment could be allowed. This will subsequently increase productivity and Longbridge will become a highly viable site. The company can concentrate on building up the profitable section and can continue to produce the famous Rover 75. Also more focus can be placed on the MG marquee. The disadvantages are that 5000 employees would be sacked. Britain would no longer have a mass producer of cars in the area around the plants owned by Rover, and so many skilled workers would be jobless, and as a result the areas would suffer. The Rover brand name may no longer be used if the new owners did not wish to use it.
Secondly, Phoenixís proposal was to retain all of the Rover business and try to get out of the slump by pumping lots of money into the business in a hope to win back customers and be in profit once again. The main and obvious advantage is that all of the workforce would be retained. Also the government would approve because unemployment would be kept low and this would help the local economy. Finally the Rover name would be kept intact, which would please followers of the company. As well as these advantages there are disadvantages these are the proposal would require initial Government funding, to get the company out of debt which would have to come from taxpayers pockets which could displease the public enough for them not to buy from Rover. There would also be no guarantee that the project would continue to make a profit. Instead the cycle could re-start and in a few years time the company could be in the same situation as it is now. The company as well may force for an early entry of the UK into the Euro, because of the strong pound. This would to allow the export of cars from the UK to other European countries.
Since buying Rover, from BMW, Phoenix have been expected to repay £500m which had been lent to them by BMW for buying the company once the company had started to make profits. Phoenix has said it aims to be in profit by 2002 although at the present time they only produce 4 types of car. These being the Rover 25, 45, 75 and 75 Tourer, which I think is not enough to compete with other car companies in the business. Phoenix is aiming to be building 200,000 Rover or MG cars at the Longbridge plant in Birmingham in a hope to draw new customers towards their cars. They are also intending to revive the MG marquee by adding a range of sports saloons to the existing MGF sports car range. A new sports car made of modern composite materials is also on the cards. Although I really have doubts over the 200,000 vehicles a year strategy. The main reason is that I feel it would make Rover too big to be a producer for a niche market but too small to be a volume manufacturer. Did Phoenix make the right decision on their plans for Rover? only time will tell.
Initially BMW wanted to integrate the Rover brand into its lower priced car market and the main aim of BMW was to produce affordable and quality cars with a good brand image. It also purchased Rover mainly for its two well-known and highly profitable marquees, Land Rover and MG.
The situation at Rover became so bad they have started to lose in excess of £2 million per day, and this amounted to losses of £647 million in the trading year of 1998. The following year wasnít much better either, in fact the situation worsened with a 26% sales decline and more losses of £600 million. The situation for the workers of the companyís famous plant Longbridge looked bleak also when it was announced that 9000 jobs would be shed.
Many reasons were given for the decline. The main reason was the company alienating profitable niche markets, such as the Metro and making an attempt to bring the brand up market, but as a result of bad management they had no replacement cars to offer to the market they desired. Another reason was BMWís apparent lack of confidence in the brand name and image, which led to the publicís view of the company image declining. BMW also failed to chase profitable fleet sales, which is selling a lot of cars to one person or company.
With the decline, the Government stepped in to offer to help the troubled company because of the effect the situation could have on not only the local but national economy. The main reasons that they were worried were a lot of people would become unemployed in the areas around the car plants. This would lead to them not paying taxes because they are out of work; also benefits would have to be paid to these people. There were three main options for the Government when helping them. These were firstly, to subsidize the company, which means give the company money to keep running. The advantages of this are that the company would continue to trade and so the jobs would be saved. Also this is a long-term solution because the government could condition the lending of the money for example they could say that they would give the company money in exchange for the safety of the workers jobs. The disadvantages are that taxes would increase to come up with these subsidies and maybe it wouldnít be worth the government providing the company because it is a lost cause. Also other companies may see this and feel it is unfair. It could also cause inefficiency in the plants because the workers may feel that the government will bail them out every time they are in trouble. Secondly, the government could nationalize the company, which means that they would buy the business. The advantages of this are that all the jobs would be safe and the business keeps on trading, also the profit would go straight to the government. The disadvantages are that it would cost a lot to buy and this would come from taxes. The company may still be unprofitable and quality could decrease because of lack of incentive on the governmentís part. Finally the last solution is to help the company find a new buyer. The advantages of this are the business survives, the taxpayer money would be saved, no government would be needed, there is a better chance of success and the plants would be saved. The disadvantages are buyer would have an unprofitable business, less government control and the company may wish to downsize the company.
The government decided that the best cause of action would be to help BMW find a new buyer. The two main candidates were Alchemy and Phoenix and these two companies put forward their plans for Rover.
Firstly, Alchemy, their proposal was to rid the company of the unprofitable sections and keep the sections of the business that made profits for example Range Rover and MG. The advantages are that by ridding the unprofitable sector greater reinvestment could be allowed. This will subsequently increase productivity and Longbridge will become a highly viable site. The company can concentrate on building up the profitable section and can continue to produce the famous Rover 75. Also more focus can be placed on the MG marquee. The disadvantages are that 5000 employees would be sacked. Britain would no longer have a mass producer of cars in the area around the plants owned by Rover, and so many skilled workers would be jobless, and as a result the areas would suffer. The Rover brand name may no longer be used if the new owners did not wish to use it.
Secondly, Phoenixís proposal was to retain all of the Rover business and try to get out of the slump by pumping lots of money into the business in a hope to win back customers and be in profit once again. The main and obvious advantage is that all of the workforce would be retained. Also the government would approve because unemployment would be kept low and this would help the local economy. Finally the Rover name would be kept intact, which would please followers of the company. As well as these advantages there are disadvantages these are the proposal would require initial Government funding, to get the company out of debt which would have to come from taxpayers pockets which could displease the public enough for them not to buy from Rover. There would also be no guarantee that the project would continue to make a profit. Instead the cycle could re-start and in a few years time the company could be in the same situation as it is now. The company as well may force for an early entry of the UK into the Euro, because of the strong pound. This would to allow the export of cars from the UK to other European countries.
Since buying Rover, from BMW, Phoenix have been expected to repay £500m which had been lent to them by BMW for buying the company once the company had started to make profits. Phoenix has said it aims to be in profit by 2002 although at the present time they only produce 4 types of car. These being the Rover 25, 45, 75 and 75 Tourer, which I think is not enough to compete with other car companies in the business. Phoenix is aiming to be building 200,000 Rover or MG cars at the Longbridge plant in Birmingham in a hope to draw new customers towards their cars. They are also intending to revive the MG marquee by adding a range of sports saloons to the existing MGF sports car range. A new sports car made of modern composite materials is also on the cards. Although I really have doubts over the 200,000 vehicles a year strategy. The main reason is that I feel it would make Rover too big to be a producer for a niche market but too small to be a volume manufacturer. Did Phoenix make the right decision on their plans for Rover? only time will tell.
Wow you don't know how intresting what you wrote is.
*lapses into coma*
Why are you posting your homework on here?
*lapses into coma*
Why are you posting your homework on here?
Rover produced its first car in 1904, and became the backbone of the British car industry. The downfall of Rover began in the 1970ís when continuous work disputes ruined the brand image of the company. British Aerospace bought the troubled company in 1988, for a price considered below value and then BMW the bought the company in 1994 for £880 million. Which leads us to where we are now, the company is again in trouble and BMW are very eager to sell the company. The two companies interested in the company are Phoenix and Alchemy. In this report I will explain each of the two proposals, weigh up the pros and cons for each and then evaluate the situation and whether the right choice was made by Phoenix who ended up buying the company for only £10.
Initially BMW wanted to integrate the Rover brand into its lower priced car market and the main aim of BMW was to produce affordable and quality cars with a good brand image. It also purchased Rover mainly for its two well-known and highly profitable marquees, Land Rover and MG.
The situation at Rover became so bad they have started to lose in excess of £2 million per day, and this amounted to losses of £647 million in the trading year of 1998. The following year wasnít much better either, in fact the situation worsened with a 26% sales decline and more losses of £600 million. The situation for the workers of the companyís famous plant Longbridge looked bleak also when it was announced that 9000 jobs would be shed.
Many reasons were given for the decline. The main reason was the company alienating profitable niche markets, such as the Metro and making an attempt to bring the brand up market, but as a result of bad management they had no replacement cars to offer to the market they desired. Another reason was BMWís apparent lack of confidence in the brand name and image, which led to the publicís view of the company image declining. BMW also failed to chase profitable fleet sales, which is selling a lot of cars to one person or company.
With the decline, the Government stepped in to offer to help the troubled company because of the effect the situation could have on not only the local but national economy. The main reasons that they were worried were a lot of people would become unemployed in the areas around the car plants. This would lead to them not paying taxes because they are out of work; also benefits would have to be paid to these people. There were three main options for the Government when helping them. These were firstly, to subsidize the company, which means give the company money to keep running. The advantages of this are that the company would continue to trade and so the jobs would be saved. Also this is a long-term solution because the government could condition the lending of the money for example they could say that they would give the company money in exchange for the safety of the workers jobs. The disadvantages are that taxes would increase to come up with these subsidies and maybe it wouldnít be worth the government providing the company because it is a lost cause. Also other companies may see this and feel it is unfair. It could also cause inefficiency in the plants because the workers may feel that the government will bail them out every time they are in trouble. Secondly, the government could nationalize the company, which means that they would buy the business. The advantages of this are that all the jobs would be safe and the business keeps on trading, also the profit would go straight to the government. The disadvantages are that it would cost a lot to buy and this would come from taxes. The company may still be unprofitable and quality could decrease because of lack of incentive on the governmentís part. Finally the last solution is to help the company find a new buyer. The advantages of this are the business survives, the taxpayer money would be saved, no government would be needed, there is a better chance of success and the plants would be saved. The disadvantages are buyer would have an unprofitable business, less government control and the company may wish to downsize the company.
The government decided that the best cause of action would be to help BMW find a new buyer. The two main candidates were Alchemy and Phoenix and these two companies put forward their plans for Rover.
Firstly, Alchemy, their proposal was to rid the company of the unprofitable sections and keep the sections of the business that made profits for example Range Rover and MG. The advantages are that by ridding the unprofitable sector greater reinvestment could be allowed. This will subsequently increase productivity and Longbridge will become a highly viable site. The company can concentrate on building up the profitable section and can continue to produce the famous Rover 75. Also more focus can be placed on the MG marquee. The disadvantages are that 5000 employees would be sacked. Britain would no longer have a mass producer of cars in the area around the plants owned by Rover, and so many skilled workers would be jobless, and as a result the areas would suffer. The Rover brand name may no longer be used if the new owners did not wish to use it.
Secondly, Phoenixís proposal was to retain all of the Rover business and try to get out of the slump by pumping lots of money into the business in a hope to win back customers and be in profit once again. The main and obvious advantage is that all of the workforce would be retained. Also the government would approve because unemployment would be kept low and this would help the local economy. Finally the Rover name would be kept intact, which would please followers of the company. As well as these advantages there are disadvantages these are the proposal would require initial Government funding, to get the company out of debt which would have to come from taxpayers pockets which could displease the public enough for them not to buy from Rover. There would also be no guarantee that the project would continue to make a profit. Instead the cycle could re-start and in a few years time the company could be in the same situation as it is now. The company as well may force for an early entry of the UK into the Euro, because of the strong pound. This would to allow the export of cars from the UK to other European countries.
Since buying Rover, from BMW, Phoenix have been expected to repay £500m which had been lent to them by BMW for buying the company once the company had started to make profits. Phoenix has said it aims to be in profit by 2002 although at the present time they only produce 4 types of car. These being the Rover 25, 45, 75 and 75 Tourer, which I think is not enough to compete with other car companies in the business. Phoenix is aiming to be building 200,000 Rover or MG cars at the Longbridge plant in Birmingham in a hope to draw new customers towards their cars. They are also intending to revive the MG marquee by adding a range of sports saloons to the existing MGF sports car range. A new sports car made of modern composite materials is also on the cards. Although I really have doubts over the 200,000 vehicles a year strategy. The main reason is that I feel it would make Rover too big to be a producer for a niche market but too small to be a volume manufacturer. Did Phoenix make the right decision on their plans for Rover? only time will tell.
Initially BMW wanted to integrate the Rover brand into its lower priced car market and the main aim of BMW was to produce affordable and quality cars with a good brand image. It also purchased Rover mainly for its two well-known and highly profitable marquees, Land Rover and MG.
The situation at Rover became so bad they have started to lose in excess of £2 million per day, and this amounted to losses of £647 million in the trading year of 1998. The following year wasnít much better either, in fact the situation worsened with a 26% sales decline and more losses of £600 million. The situation for the workers of the companyís famous plant Longbridge looked bleak also when it was announced that 9000 jobs would be shed.
Many reasons were given for the decline. The main reason was the company alienating profitable niche markets, such as the Metro and making an attempt to bring the brand up market, but as a result of bad management they had no replacement cars to offer to the market they desired. Another reason was BMWís apparent lack of confidence in the brand name and image, which led to the publicís view of the company image declining. BMW also failed to chase profitable fleet sales, which is selling a lot of cars to one person or company.
With the decline, the Government stepped in to offer to help the troubled company because of the effect the situation could have on not only the local but national economy. The main reasons that they were worried were a lot of people would become unemployed in the areas around the car plants. This would lead to them not paying taxes because they are out of work; also benefits would have to be paid to these people. There were three main options for the Government when helping them. These were firstly, to subsidize the company, which means give the company money to keep running. The advantages of this are that the company would continue to trade and so the jobs would be saved. Also this is a long-term solution because the government could condition the lending of the money for example they could say that they would give the company money in exchange for the safety of the workers jobs. The disadvantages are that taxes would increase to come up with these subsidies and maybe it wouldnít be worth the government providing the company because it is a lost cause. Also other companies may see this and feel it is unfair. It could also cause inefficiency in the plants because the workers may feel that the government will bail them out every time they are in trouble. Secondly, the government could nationalize the company, which means that they would buy the business. The advantages of this are that all the jobs would be safe and the business keeps on trading, also the profit would go straight to the government. The disadvantages are that it would cost a lot to buy and this would come from taxes. The company may still be unprofitable and quality could decrease because of lack of incentive on the governmentís part. Finally the last solution is to help the company find a new buyer. The advantages of this are the business survives, the taxpayer money would be saved, no government would be needed, there is a better chance of success and the plants would be saved. The disadvantages are buyer would have an unprofitable business, less government control and the company may wish to downsize the company.
The government decided that the best cause of action would be to help BMW find a new buyer. The two main candidates were Alchemy and Phoenix and these two companies put forward their plans for Rover.
Firstly, Alchemy, their proposal was to rid the company of the unprofitable sections and keep the sections of the business that made profits for example Range Rover and MG. The advantages are that by ridding the unprofitable sector greater reinvestment could be allowed. This will subsequently increase productivity and Longbridge will become a highly viable site. The company can concentrate on building up the profitable section and can continue to produce the famous Rover 75. Also more focus can be placed on the MG marquee. The disadvantages are that 5000 employees would be sacked. Britain would no longer have a mass producer of cars in the area around the plants owned by Rover, and so many skilled workers would be jobless, and as a result the areas would suffer. The Rover brand name may no longer be used if the new owners did not wish to use it.
Secondly, Phoenixís proposal was to retain all of the Rover business and try to get out of the slump by pumping lots of money into the business in a hope to win back customers and be in profit once again. The main and obvious advantage is that all of the workforce would be retained. Also the government would approve because unemployment would be kept low and this would help the local economy. Finally the Rover name would be kept intact, which would please followers of the company. As well as these advantages there are disadvantages these are the proposal would require initial Government funding, to get the company out of debt which would have to come from taxpayers pockets which could displease the public enough for them not to buy from Rover. There would also be no guarantee that the project would continue to make a profit. Instead the cycle could re-start and in a few years time the company could be in the same situation as it is now. The company as well may force for an early entry of the UK into the Euro, because of the strong pound. This would to allow the export of cars from the UK to other European countries.
Since buying Rover, from BMW, Phoenix have been expected to repay £500m which had been lent to them by BMW for buying the company once the company had started to make profits. Phoenix has said it aims to be in profit by 2002 although at the present time they only produce 4 types of car. These being the Rover 25, 45, 75 and 75 Tourer, which I think is not enough to compete with other car companies in the business. Phoenix is aiming to be building 200,000 Rover or MG cars at the Longbridge plant in Birmingham in a hope to draw new customers towards their cars. They are also intending to revive the MG marquee by adding a range of sports saloons to the existing MGF sports car range. A new sports car made of modern composite materials is also on the cards. Although I really have doubts over the 200,000 vehicles a year strategy. The main reason is that I feel it would make Rover too big to be a producer for a niche market but too small to be a volume manufacturer. Did Phoenix make the right decision on their plans for Rover? only time will tell.