Risk Assessment for Vertex-Speed Ltd. Durham County, UK - Essay Example

Sunderland won the contract for the Micra with the promise of a 40m government grant. General Motors (GM) manufactures cars in the UK under the name Vauxhall and they also indicate that the strong British pound is making it difficult to see a profit. 5m grants ensured that the new Vectra model was produced in Ellesmere Port. This created 1,200 jobs in that city, but the old Luton plant loss 1,900 jobs when the facility moved to Ellesmere Port. Vauxhall required 5m in government grants for production to occur in the UK and not at the Antwerp, Belgium plant.

GM also finds the strong pound a challenge for profitable business. Toyota has two factories in the UK at Burnaston and Deeside with over 3000 employees. The Deeside plant produces car engines. The other car markets doing well are the luxury classes such as Rolls Royce and Bentley, which are not as affected by the varying exchange rates. The UK has over 40 vehicle manufacturing plants with 40 billion of the Gross National Product with the majority of producers being foreign owned. The industry is vital to the UK and means that diversification, expansion and other adaptations are required to compete in a global market Management Focus.

The plants closed or consolidated (Luton for example) have provided a method of beginning business for companies that could not afford the start up costs from the ground up (zero based production sites). Vertex-Speed Ltd has seen impressive growth and development in the last twenty years in spite of a changing market and the pound so strong against the Euro. County Durham is an ideal location with cooperation from local governments and a good reputation with consumers. 35% of our production is in the Vertex Gamma, a luxury sedan popular with the executive class.

A study was ordered by Vertex-Speed Ltd regarding the feasibility of establishing an automobile factory in either Brazil or Malaysia since the majority of the Gammas produced are exported to Brazil and Malaysia. The move to a horizontally integrated Multinational Corporation (MNC) is a complicated one and many aspects of such expansion must be taken into consideration. The following assessments investigate the political, economic states of Brazil and Malaysia as well as a number of other factors such as the level of corruption and the attitudes toward foreign investors, which could determine whether it is best to consider Greenfield investment or an acquisition.

A reliable supply chain and component makers are mandatory and more important than cheap labour costs (Management Focus). Risk Assessment for BrazilCountry Risk- FinancialBrazil has the largest economy in South America and is a country of contrasts. While not a poor country with