US Auto Solution

Essay by pugdaddy57B, July 2009

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For this weeks paper I was asked to analyze the scenario of the merger between U.S. Auto an automobile manufacturing company located in the United States, and Auto Mex a company located in Mexico whose main focus is the marketing of new and used U.S. autos. I will first list my understanding of what the scope of this job, followed by three scenarios, and finish with my recommendation.

Scope of work to be done:I will read the documents provided concerning the offer that U.S. Auto proposed to Automex, the emails leading up to the meeting, the minutes of the meeting and the letter from Luis Alvarado the CEO of Automex declining the merger. I will then compile three scenarios to reviewed, and make my recommendations.

Issue 1:Updating old plant - From the information that was provided it stated that the line plant is out dated and unable to keep up with production.

Solution:While it might seem unusual now might be the time to begin the process of updating assets needed to manufacture your vehicles. With recent media attention and various auto plants closing it is no surprise that many manufacturers are taking advantage of the situation and focusing on updating or replacing out of date equipment and plants. By updating your existing equipment you may be able to better your energy efficiency by as much as 61% and accelerate your work flow by as much as 55 percent (Rubik).

During these tough times prices are generally lower as many companies have cancelled their orders leaving the equipment manufacturer with excess material, idle employees and a lower return on their investment (ROI).

Time and money are of course, key factors to consider during any expansion, one consideration would be to purchase one of the plants that are now...