Practise Edexcel Business questions on global industries and companies, applying scale, competition and international structure to strategic evaluation.
Extract A Selected history of Maxion Wheels Maxion Wheels, based in Brazil, was started in 1908 and is now the world's largest wheel manufacturer. It has grown through a series of takeovers including Hayes Lemmerz and Fumagalli, both major manufacturers of wheels and automotive components. Since designing the first wooden-spoke wheels for the Model T Ford car, Maxion Wheels has been responsible for nearly every major wheel innovation in automotive history. Over the course of the last 100 years, it has grown to supply vehicle manufacturers with a wide range of products.
Extract B Maxion Wheels Opens New Aluminium Wheel Plant in Brazil In 2016, Maxion Wheels opened a new light vehicle aluminium wheel plant in Limeira, Brazil. The new plant, next to the company's existing steel wheel plant, will create an additional 500 new jobs by 2020. Brazilian motorists are following the global trend for more sophisticated and stylish vehicles. This includes a growing demand for aluminium wheels on new cars and the new factory will enable Maxion Wheels to meet this increasing consumer demand. The new Maxion Wheels Limeira aluminium plant will open in two phases. In the first phase, production will reach 800,000 wheels per year. Phase two will complete the project, bringing production to two million wheels per year by 2020.
Extract C Selected financial data for Maxion Wheels - third quarter 2021 (Brazilian Reals)
Extract D Dongfeng and Maxion Wheels form joint venture In 2019, Maxion Wheels announced an agreement to form a new joint venture with Dongfeng, one of China's largest automotive parts companies. The new joint venture will build a plant in Hubei Province, China, with a capacity to produce 2,000,000 wheels a year. Construction of the plant started in 2020. The joint venture operation is expected to initially bring more than 450 new jobs to the region. It will produce low pressure die cast aluminium wheels, including high-end wheel finishes, as well as other innovative wheel features.
Extract E Extracts from Maxion Wheels' Code of Conduct - suppliers - Maxion Wheels requires ethics, integrity and transparency in its supply chain and its relationship with suppliers - Maxion Wheels' employees, directors and officers must act ethically when selecting, contracting and maintaining suppliers - Maxion Wheels' suppliers must not allow child labour or any type of slave or forced labour or compulsory labour - The relationship between Maxion Wheels and its suppliers must be formalised by means of the proper documentation, containing specific details regarding each suppliers' obligation to comply with this Code - Maxion Wheels is committed to sourcing the materials used in the manufacture of its products in a manner that does not support, contribute to, aid or facilitate armed conflicts or human rights violations.
Assess the possible impact on the local economy from Maxion Wheels opening a new plant in a location such as Limeira, Brazil.
Assess the importance of supply chain considerations for a global business such as Maxion Wheels.
Sources for use with Extract A Asia’s need for coal to lift Australian coal exports in 2019 The increasing import of coal by India and Southeast Asia has been driven by the greater use of electricity. This will lead to a strong increase in Australian coal exports over the next five years. The International Energy Agency (IEA) predicts a 4.6% rise in coal‑powered generation in India. Strong economic growth in Indonesia and Vietnam will increase the need for coal by 5%. The Australian economy is dominated by its service sector, even though it produces a lot of coal and other minerals. The service sector makes up 62.7% of Australian GDP and employs 78.8% of the labour force. Australian GDP in 2019 was estimated at A$1.9 trillion. Extract B Vietnam’s rising Foreign Direct Investment (FDI) inflow Up to the year 2019 there have been 10 consecutive years of increase in FDI inflow into Vietnam. There is a significant increase in both the volume and the value of FDI projects. In 2019, there were 3,478 new projects, a 28.2% increase on the previous year. These new projects brought in an extra US$31.8bn, a 3.1% increase on the previous year. South Korea was the top investor in Vietnam in 2019 investing US$7.9bn, followed by Hong Kong at US$7.8bn. Vietnam has benefitted from the US‑China trade war, and the political tension in Hong Kong. Vietnam is being chosen by investors among other ASEAN countries because of its cultural similarity to China, low labour costs and pro‑investment policies. The Vietnamese processing and manufacturing sector attracted 68% of Vietnam’s total FDI in 2019. In June 2019, Apple announced its plan to start trial production of the wireless earphones, AirPods, in Vietnam to avoid the cost of tariffs imposed on China by the US. The World Bank expects FDI to continue to rise in 2020. Manufacturers are showing interest in the Central Region where land available for industrial use is vast. However, it is critical for the Vietnamese government to better integrate into the global supply chain and improve the skills of the labour force. 5 5 10 15
3 Extract C Vietnam ranked 70th in World Bank’s 2020 Ease of Doing Business Ranking Vietnam was placed 70th out of 190 economies in the World Bank’s 2020 Ease of Doing Business ranking. The ranking was down one place from the previous year, despite a higher score of 69.8 points out of 100. In the report, the World Bank marked and ranked economies in ten areas including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, employing workers, and dealing with the government. Vietnam was said to have made significant improvements in getting credit and paying taxes, resulting in increases of 5% to 7% annually. Other areas witnessed minor improvements or remained unchanged. The ranking of other Southeast Asian countries were Malaysia (12th), Thailand (21st), Indonesia (73rd), the Philippines (95th), Brunei (66th), Cambodia (144th) and Laos (154th). Elsewhere, New Zealand came first in the 2020 ranking, followed by Singapore, Hong Kong (China), Denmark, the South Korea and the US. Extract D European Parliament approves EU‑Vietnam free trade and investment deal The EU‑Vietnam trade agreement, described as the most modern and ambitious agreement ever concluded between the EU and a developing country, received the European Parliament’s backing on the 20 February 2020. The agreement will remove virtually all customs duties between the EU and Vietnam over the next ten years, including on Europe’s main export products to Vietnam. European businesses will also be able to bid on public tenders put out by the Vietnamese government and several cities, including Hanoi. The main EU imports from Vietnam include telecommunications equipment, clothing and food products. The EU mainly exports goods such as machinery and transport equipment, chemicals and agricultural products to Vietnam. Vietnam is the EU’s second largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, its trade in goods is worth €47.6bn a year and €3.6bn when it comes to services. EU exports to the country have grown between 5% and 7% annually. The EU’s trade deficit with Vietnam was €27bn in 2018.
Discuss the possible impact of increased FDI flows on the national economy of a
country such as Vietnam.
Source for use with Extract D Shein’s low prices or ethical practices, what’s more important to consumers? Shein, a Chinese company, is one of the biggest online fast-fashion retailers but there are serious concerns about its ethical practices. A documentary by Channel 4* showed poor wages and working conditions at Shein’s factories, where employees worked 18-hour shifts for seven days a week. Employees were allowed only one day off per month and had to pay a heavy fine for any mistakes in production. The company is also accused of sending most customer returns to landfill as it is cheaper than properly processing them. At the same time, a study by Simon-Kucher & Partners found that 90% of global consumers now look for more sustainable and ethical options, while 75% of UK adults said they changed their purchasing habits to be more sustainable. Yet a week after the documentary was shown, Shein reported its busiest day for the website since the summer, with 616,000 visitors. Sustainability in the fashion sector has become a big topic in recent years, with many of the big retailers, such as Zara and H&M, implementing ways to reduce their carbon footprint. Shein seems to have turned the other way and concentrated on maximising its profit margins, while also trying to keep prices as low as possible. * Channel 4 is a UK-based television business
the importance of business ethics for a global business.