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Cummins’ has many worldwide locations spreading widely into each
continent. The European and Central Area Headquarters are located at
Iver in Buckinghamshire. The Global Headquarters are located in
Columbus in Indiana (USA). A map to show the location of the Cummins
plant in Daventry is shown below. The location of the Daventry plant
is in a central position in the country and is close to motorways,
train-stations, and an International Airport (Birmingham). This makes
it ideal for products and materials to be delivered and distributed
throughout the country and onto other countries. The majority of
Cummins’ employees are from Daventry. The unemployment level is 4.8%
nationally, it is significantly lower in the Daventry district. The
current unemployment rate in Northamptonshire is 1.7%. Before Cummins
decided to set up a plant in Daventry they should have looked at the
• Does Daventry have the qualified and skilled employees that Cummins
• Is the wage rate high in the Daventry area?
• Do we need to be near our customers?
• How much will it cost to set-up and keep running the plant in the
Below is a map to show the location of Cummins in Daventry. It shows
the surrounding roads which can be important to the location of a
Businesses set up in certain areas can gain by receiving grants. The
government has sectioned the UK into Tier 1 and Tier 2. Tier 1 is the
section in most need of grants because of high unemployment, lower
earning levels. Tier 2 is the areas are more local areas of the
Grant eligibility - the main factors
There are a number of factors that affect the eligibility for grants.
Location of your business
Each of the countries of the United Kingdom has its own range of
Some areas get extra grants due to social deprivation or high
Some grants are given by local authorities to help local businesses.
Size of your business
You may only be eligible for some grants if your business is a
particular size, measured either by turnover or the number of
Many grants are limited to small or medium-sized enterprises (SMEs) -
roughly one with fewer than 250 employees.
Grants are commonly targeted at industries that are economically
The government targets grants at industries they want to encourage.
Grants rarely target retail businesses.
Sales development increasingly attracts government grants, with an
emphasis upon assistance to exporters.
Grants are frequently targeted at manufacturing, farming and tourism.
Businesses specialising in information technology and innovation are
eligible for many grants.
The purpose of the grant
Grants are often awarded for a specific purpose such as purchasing
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Grant bodies prefer to see specific targets and results - often
compatible with their own objectives.
The importance of the grant money to the project
As well as making an assessment of the importance of their
contribution the awarding body will expect a high level of commitment
and a strong probability of success. Whether you are eligible or not
for a grant will depend on the terms and conditions of the specific
grant applied for.
Cummins has a backlog of orders. This is when more orders are coming
in when the production line cannot keep up with them. To solve this
backlog Cummins’ will need more premesis and production plants to keep
customers happy. Cummins are expanding in Daventry. The Daventry plant
is not fully fiunctional. By the end of the year Cummins Daventry will
be fully functional to all orders specific for the Daventry plant.
Cummins may also decide to open up new locations across the country
and the rest of the world to generally expand and get on top with its
Identify the key customers and main competitors
Cummins’ believe they are the leading supplier of engines (for marine,
military, transport, mining and construction), generators, filtration
systems. Businesses from all over world purchase Cummins’ produce.
During Cummins’ years of business they have done market research to
find out what their customers need. The key customers for Cummins are:
Governments, heavy machinery giants and marine industries. Governments
across the world purhcase high powered engines for their public
defenses. Businesses such as mining and quarying firms require heavy
duty engines for their work. Marine producers purchase engines and
filtration systems for boats, submarines and cruisers. Unlike the
average sole trader or small business who look for every possible
customer. Cummins already know their target market. This can be an
advantage as Cummins’ can specifically design the correct product to
suit their customers and their needs.
Describe the current economic conditions and main environmental
constrainsts of Cummins
Cummins produce many engines. Unfortunately for Cummins many emissions
are being produced by their business. Cummins ‘environmental mission
states that they are finding ways to reduce noise, reduce emissions
and improve fuel economy. At Cummins, we provide the technologies
that power the world and support its economies. We conduct our
business with the consent of society and we strive to improve the
quality of life of all people. We demand that everything we do leads
to a cleaner, healthier, safer environment.
Economic constraints always affect how successful a business is.
Businesses buying from America can save money due the dollar being
strong to the pound. Exchange rates will affect Cummins for every
product/part they buy and sell from abroad. Interest rates do not
affect Cummins. This is due to their customers. Interest rates affect
families the most. The Bank of England is set to raise interest rates
at 5% by the end of the year. Cummins do not need to worry about this
as customers buying their products will not be families, they will
mainly be large businesses and organisations/governments. The current
exchange rate for the US dollar ($) to the British pound (£) is
1.8114. This can affect Cummins’ profits a great deal. For example, if
Cummins make a $5million profit, from a sale to America. Then the
profit will need to be exchanged to the British pound. The amount of
profit after the exchange will be £2,760,295.90. This is a significant
loss, which is caused by the exchange rates.
Foreign Currency and exchange risks
When Cummins exports or imports goods or services, they will need to
consider how they will protect themselfs against changes in the
exchange rate. A tiny variation in the rate could potentially cost
Cummins many thousands of pounds.
Cummins will need to decide how to make and receive payments in
foreign currencies. They can decide to open a bank account in a
foreign country if they choose.
Identify how Cummins competes with its main competitors, and is
dealing with economic conditions and environmental constraints
Cummins will always have many competitors. This is because there is
always money to be made when dealing with engines, parts and
machinery. In order to keep a constant revenue flowing into the
business, Cummins need to adjust their prices in order to compete with
rival businesses. In order to be successful and beat competitors it is
not always the price which needs to be affordable. The quality of the
end product can affect how many customers Cummins can get. For
JCB are currently producing heavy duty machinery to be fitted into
earth moving equipment for use in quaries. JCB are selling the
machinery and equipment for £2m per machine. New customers may see
this as a ideal situation to grab a bargain. But if they look at the
history of JCB then the may be put off. JCB’s reliability for
producing long lasting and quality equipment is poor. Therfore they
may be attracted to Cummins which can provide equipment of the same
specification, of a better quality and reliabilty rate all. The cost
will be more, but many businesss would prefer to have quality and for
a long time. All this is an example of how Cummins compete with
competitors. This has also led to Cummins taking more customers and
JCB losing customers.
Explain how the location of Cummins is an advantage or disadvatnage in
dealing with these external influences
Due to international locations and plants across the world, the
external influences do not affect Cummins beacause of its location. As
Cummins is spread across the world, with many locations it can only be
an advantage. This is possible because different regions and
continents have different laws and restrictions. For example in the
USA it may only be possible for Cummins USA to produce so many
products, as when they are made chemicals are released into the
atmosphere. The USA may have certain laws on how much chemicals or
polluting emmisons can be released per month. This can be applied on
other parts of a business which can change in different countries.
Judge how well Cummins has responded to competition, economic
conditions and environmental contraints. Judge wether the location of
each business has been an important factor in these responses
When Cummins faces competition or a new competitive product in the
market they will need to react in many ways. If possible they will get
hold on the new product and asses it with their existing product. If
the product is of the same genre or specification, then Cummins will
possibly reduce the price of their product and advertise it more.
Cummins generally compete well with rival competition. This is shown
by the sales of their products which are in competition with other
Environmental constraints have affected Cummins in many ways. Due to
exchange rates Cummins have opened more branches and locations
worldwide. This will help with the loss of profit which can be
affected throughout the world. The location if Cummins in Daventry is
in the United Kingdom. The UK has the world’s fourth largest economy.
The unemployment level is low compared to other European countries.
The local economy of the Northamptonshire area is constantly high. The
main reason for this is annual British Grand Prix held a Silverstone.
That one event adds £40m into the regional economy. All these factors
are catching for new or existing businesses wanting to move to the
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