The Fall of MG Rover*



Case Code : SCBSTR166
Publication date :2005
Subject : Business Strategy
Industry : Automobiles
Length : 7 Pages


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Abstract: ICMR India ICMR India ICMR India ICMR India RSS Feed

UK based MG Rover was one of the oldest car manufacturers in the world. Founded more than a century ago, MG Rover's problems began in the early 1970s. The company had to be nationalized to save it from bankruptcy induced by labour unrest and financial problems. However, the situation did not improve under the Government's management and the company was privatized by selling it to British Aerospace (BAe). BAe sold MG Rover to BMW which, after prolonged losses, sold it to Phoenix Venture Holdings (Phoenix). Under Phoenix, MG Rover declared bankruptcy when the collaboration negotiations with China's SAIC collapsed. The case details the circumstances that led MG Rover into problems and finally into bankruptcy. It examines the causes of MG Rover's troubles including the role played by the four acquirers of MG Rover.


Understand how internal, industry-specific and macroeconomic factors can negatively affect the financial performance of a company.
Examine the role of government in business.
Study the importance of good labor relations for proper functioning of a company.
Study the circumstances that led to the collapse of MG Rover.
Discuss the measures that should have been taken by the acquirers of MG Rover in order to revive the company's financial and business performance.

Questions for Discussion:

1. Since its problems began in the 1970s, MG Rover was acquired by the British Government, BAe, BMW and Phoenix Four. Discuss the role played by each of these management in the downfall of the company.
2. In spite of perennial problems, MG Rover never lacked patrons for its classic marques like Land Rover. What reasons led Rover suffer losses even when its products had a strong appeal. In the light of this case, what factors do you think are important for the success of an automobile company? Explain.
3. In a notoriously competitive business with over-capacity like automobile industry, only the very best management succeeds.' Substantiate the statement with reference to MG Rover's management related problems. Discuss with suitable real-life examples, how an effective management can make a company operating in a highly competitive business successful?

Key words:
MG Rover, Corporate Turnaround ,Merger and Acquisition ,Bankruptcy ,Industrial Relations ,Crises ,Financial Mismanagement ,Nationalization ,Privatization ,Corporate Mismanagement

*Note : This case is a simplified version of a longer case study, and is intended for learners for whom English is a foreign language. The longer version of this case study (BSTR166) is available at: