Bertos Manufacturing Corporation (BMC)

Factors:

· Projected volume of International Business

· Knowledge and Experience in Foreign Market

· Banking Structure and Regulation in target country

· Tax Considerations

· Customer Profile

Russia - No, Sanctions from the U.S. and EU are making it difficult for russian businesses to access international capital markets (Source: https://www.pymnts.com/news/banking/2019/morgan-stanley-russia-shutdown/ )

FROM THE ECONOMIST INTELLIGENCE UNIT: 

RUSSIA’S BUSINESS ENVIRONMENT “Tensions with the West, and especially the US, have dampened the business environment outlook. We expect US and EU sanctions, as well as Russian counter-sanctions, to remain in place in the medium term. Poor relations with the West have increased the risks to foreign companies operating in Russia. Capital controls are unlikely, but remain possible in the case of a severe financial crisis (for instance if global oil prices drop sharply—not our core scenario). The gains made by Russia's entry to the World Trade Organisation (WTO) now look to be under threat as a result of increasing protectionism. Long-standing weaknesses of the investment environment will persist. Increased state intervention is likely to be mixed with market-oriented policies in some areas. There will be some measures to attract (mostly non-Western) foreign investment, such as in energy projects that have special technological and capital needs, but western sanctions will constrain such steps. ****LOOK BAD!!!

http://country.eiu.com/article.aspx?articleid=1117887695&Country=Russia&topic=Business&subtopic=Business+environment&subsubtopic=Rankings+overview

Switzerland - No BMC plant operations, 

Turkey - Middle East operations account for a large portion of revenue so possibly Yes? 

Or No, based on this article... https://www.euromoney.com/article/b1fffl19stqgh8/risk-experts-consistently-proved-right-on-turkey

Venezuela - No, currently no BMC plants operating in this country & major political crisis

Argentina – No

Turkey – No

http://country.eiu.com/allcountries.aspx

Background of Parent Company

Bertos Manufacturing Corporation (BMC) is one of the largest companies of the country in the manufacturing of construction and mining equipment, and engines. BMC draws its origin in a California firm organized in 1890 to manufacture steam-powered tractors for farming. The firm was nominally capitalized and aspired to make inroads in the local market by having its tractors plow California fields. However, soon after the turn of the century, an abandoned manufacturing plant by a failed tractor company in a major manufacturing center in Illinois was instrumental in the relocation of operations in the Midwest. The location of this center on the Mississippi River made it a prime transportation hub offering important prospects for the young company. Indeed, the move proved a turning point in the development of the company. Domestic sales grew so significantly that by 1911 the factory employed a little over 600 individuals. A natural consequence of the domestic momentum was the firm’s entry into foreign markets through tractor exports to Argentina, Mexico, and Canada.

World War II was a company milestone as it created a sharp increase in the demand for tractors to built airfields and other military facilities in strategic sites of the Pacific. However, it was during the post-war construction boom that the company grew at a rapid pace. A series of mergers and acquisitions diversified operations into the current scope of products and contributed to BMC’s growth to an industrial company of national and international dimension. A successful export-oriented strategy led to the establishment of a manufacturing venture outside the United States in 1950, which marked the beginning of BMC’s development into a multinational corporation.

The company operates in two primary lines of business: machinery and engines. The machinery line of business designs manufactures and sells construction, mining, and forestry machinery, including track and wheel tractors, hydraulic excavators, pipe layers, log loaders, off highway trucks, and related parts. The engines business line designs, manufactures and sells diesel and natural gas engines and gas turbines, which, in addition to their use in the company's own machines and vehicles, provide power for boats, ships and locomotives.

The recent financial crisis (2008) led to the restructuring of operations and renewed management’s commitment to fuel efficiency, quality, technology and safety of the company’s machinery and engine products. Overall, BMC manufactures some 400 products which are sold both at home and abroad through a network of dealers. The company has a worldwide network of 220 dealers: 63 dealers in the United States and 157 in other countries. To accommodate domestic and international demand for its products and components the company has built 109 plants in different part of the world. Of these, 51 plants are located in the United States and 58 in foreign countries, namely, Australia, Belgium, Brazil, Canada, England, France, Germany, Hungary, India, Indonesia, Italy, Japan, Mexico, the Netherlands, Northern Ireland, the People's Republic of China, Poland, Russia, South Africa and Sweden. The company also licenses or subcontracts the manufacture of BMC-branded clothing, hats, footwear, and other consumer products .

To support higher volumes, growth and new product introductions, BMC’s worldwide employment is a little over 100,000, split evenly between the United States and the rest of the world. Consolidated revenue last year amounted to about $45 billion and net profit (after taxes) $3.5 billion (Table 1). More than half of the total revenue was generated outside the United States, while the North American market was the single largest source. A breakdown of revenues by geographic region is provided in Table 2.

Although this performance represents the culmination of an effective international strategy, BMC has been increasingly concerned about its future potential in the global market place. Its board of directors has recognized that although opportunities for future growth exist, international competition may undermine the maximization of consolidated after-tax returns. To offset the effects of such a trend, the board, in its last meeting, decided to explore new avenues for growth. A top prospect was the international expansion of financial services to support the overseas dealer sales of BMC products.