An analysis of BMW’s acquisition of the Rover Group in January 1994.
This paper examines how acquisitions are often a relatively quick way to enter new markets, acquire new products or services, learn new resource conversion processes and acquire needed knowledge and skills. It looks at how mergers or acquisitions often appear as an attractive and logical business strategy offering a short-cut in achieving company goals compared with organic growth. In particular, it analyses BMW?s acquisition of the Rover Group in January 1994 by considering the situation before and after the acquisition and evaluating who benefited the most from the transaction.
Outline
Introduction
BMW
Rover
BMW ? Rover: A Comparison
The Acquisition
Culture
Benefits
Management
Shareholders
Conclusion
Outline
Introduction
BMW
Rover
BMW ? Rover: A Comparison
The Acquisition
Culture
Benefits
Management
Shareholders
Conclusion
BMW (Bayrische MotorenWerke = Bavarian Engine Plants) was founded in 1916 and manufactures cars, motorcycles and aircraft engines. It is a genuine global power brand that is represented in 130 countries, has over 118 000 employees and sells in excess of one million cars each year. Prior to the acquisition it had a good financial base and was relatively profitably. It enjoyed a good market share in its niche fully understanding customer’s tastes and preferences. It possessed advanced logistics technology and a strong Research & Development Team. However, while a market leader in its niche, in terms of volume sales it falls well behind other manufactures and therefore was not able to achieve the economies of scale that its competitors enjoyed.