Case Study: The ‘English Patient’ and the Chinese takeaway: Examining social responsibilities in the MG Rover collapse This case discusses the collapse of Britain’s last remaining major car manufacturer MG Rover in2005, and the subsequent loss of 6,500 jobs in the former industrial heartland of the West Midlands. The case traces the role played by the firm’s directors as well as overseas car companies in the Rover collapse and provides the opportunity to examine the nature of social responsibility and the relative responsibilities of governments and corporations for safeguarding employment. The name Longbridge stands for nearly a hundred years of British car manufacturing. The huge site near Birmingham in the West Midlands area has been the stage for many of the peaks and troughs of automotive history in the UK. Once the birthplace of the sporty, Austin Healey, the legendary Mini, and the practical Metro, the site has also been associated in the 1970s with industrial unrest and union militancy. More recently, the plant had started to become a virtual synonym for industrial downturn and decay, and the reversal in fortunes of the British car industry. It was a history with ups and downs, but the plant seemed to be in for a bright future when in 1994 BMW took Longbridge over from the British car manufacturer Rover. Despite suffering from under-investment, BMW saw the Rover takeover as a suitable means of expanding its range of models beyond the luxury segment that it had become famous for, into more medium-sized, family saloons that appealed to the mass market. However, during the first five years of its involvement in Britain, BMW invested more than £2.5bn (a3.8bn) in Rover, but productivity in the ageing facilities at Longbridge never reached competitive levels. Despite massive job cuts, and the introduction of more flexible work patterns, reports suggested that by 2000 BMW was running up annual losses of £880m (a13.2m) on the Rover investment, more than £2 million a day! Such losses had major impacts on BMW. As one of the smaller players in the international automotive industry, and under constant threat of hostile takeover bids itself, the company’s management got clear signals from its Questions Part A Set out the main stakeholders in the MG Rover business at the time of its collapse. How would you determine the relative importance of their stake?
Case Study: The ‘English Patient’ and the Chinese takeaway:
Examining social responsibilities in the MG Rover collapse
This case discusses the collapse of Britain’s last remaining major car manufacturer MG Rover in2005, and the subsequent loss of 6,500 jobs in the former industrial heartland of the West Midlands. The case traces the role played by the firm’s directors as well as overseas car companies in the Rover collapse and provides the opportunity to examine the nature of social responsibility and the relative responsibilities of governments and corporations for safeguarding employment.
The name Longbridge stands for nearly a hundred years of British car manufacturing. The huge site near Birmingham in the West Midlands area has been the stage for many of the peaks and troughs of automotive history in the UK. Once the birthplace of the sporty, Austin Healey, the legendary Mini, and the practical Metro, the site has also been associated in the 1970s with industrial unrest and
union militancy. More recently, the plant had started to become a virtual synonym for industrial downturn and decay, and the reversal in fortunes of the British car industry.
It was a history with ups and downs, but the plant seemed to be in for a bright future when in 1994 BMW took Longbridge over from the British car manufacturer Rover. Despite suffering from under-investment, BMW saw the Rover takeover as a suitable means of expanding its range of models beyond the luxury segment that it had become famous for, into more medium-sized, family saloons that appealed to the mass market. However, during the first five years of its involvement in Britain,
BMW invested more than £2.5bn (a3.8bn) in Rover, but productivity in the ageing facilities at Longbridge never reached competitive levels. Despite massive job cuts, and the introduction of more flexible work patterns, reports suggested that by 2000 BMW was running up annual losses of £880m (a13.2m) on the Rover investment, more than £2 million a day! Such losses had major impacts on BMW. As one of the smaller players in the international automotive industry, and under constant threat of hostile takeover bids itself, the company’s management got clear signals from its
Questions
Part A
Set out the main stakeholders in the MG Rover business at the time of its collapse. How would you determine the relative importance of their stake?
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