Mercedes Benz Advantages And Disadvantages

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Mercedes-Benz is a multinational company (MNC) division of DaimlerChrysler A.G. (DCAG), which manufactures automobiles. It was established by Karl Benz and Paul Daimler in 28th June 1926. Mercedes-Benz’s headquarter is settled in Stuttgart, Baden-Württemberg, Germany. With slogan "Das Beste oder nichts" (in English: "The best or nothing"), it focus on producing luxury cars, buses, coaches and trucks.
United State of America (USA) is the largest Foreign Direct Investment (FDI) country with 1953 projects by foreign companies since 2002. As a result, USA generates the largest inflow from FDI. For example, inflow of 13.90 million USD investments facilitates the country. On the other side, the MNC acquires large amount of benefits from USA. Southern USA has been being offering incentives and packages towards MNC aggressively since economic growth is the main priority of southern government. Alabama is one south-eastern state of USA, with estimation of 4,833,722 populations in 2013. Mercedes-Benz U.S. International (MBUSI) is the name of Mercedes-Benz manufacturing plant, which is located in Tuscaloosa County, Vance, Alabama. The subsidiary was established in 1993. Not only Mercedes-Benz, but also Honda, Hyundai, Toyota, and more than 300 companies invested in the state.
Instead of location and labor consideration, Mercedes-Benz’s FDI flow decisions are affected by the difference of exchange rate and tax rate between home and host country. In short, financial incentives and international foreign opportunity are the factors of MBUSI subsidiary establishment. This paper primarily analyzes the impact of FDI towards Mercedes-Benz and the state of Alabama. Further, the writer focuses on the risk management, and cost-benefit analysis of MBUS...

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Alabama has proven to be a suitable site for many automakers, especially Mercedes-Benz. The FDI has symbiosis mutualism towards Alabama and Mercedes-Benz. Mercedes-Benz acquires tax incentives, gain from non-union workforce, logistic and state’s aggresive support. Alabama is right-to-work state, while Germany is highly unionized. On the other side, Alabama gains economic growth, increase in employment rate, better infrastructure and developed rural area.
Exchange rate, interest rate, government policies, price fluctuate resulted in challenge and opportunity for Mercedes-Benz. Risks can be avoided by using derivatives hedging instrument, such as forward contract, interest rate swap, and currency options. Opportunity can be embraced by keep improving towards today standard, such as government policies and managing the supplier risk for better procurement.
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