SYNOPSIS OF THE CASE 1. HENRY FORD STRATEGY A. LOW - COST B. MASS PRODUCTION C. DEVELOPED MASS MARKET - ONE MODEL “T” D. LIMITED PRODUCT DIFFERENTATION E. MFG. DISTINCTIVE COMPETENCE - STANDARDIZATION OF QUALITY COMPONENT PARTS FOR EASY AND CHEAP ASSEMBLY
BROAD DIFFERENTIATION OF PRODUCT
DECENTRALIZATION - PROFIT CENTERS
FIVE DIVISIONS - FIVE MARKET SEGMENTS
CUSTOMER COULD UPGRADE WITHIN G.M. CHEVROLET, PONTIAC, OLDSMOBILE, BUICK, AND CADILLAC
2. ALFRED P. SLOAN STRATEGY
VERTICAL INTEGRATION CARRIED TOO FAR - 60%
TRANSFER PRICING PROBLEMS - CORPORATE CONTROL
HIGH COST - POOR QUALITY
PRODUCT DIFFERENTIATION BETWEEN DIVISIONS BECAME EXCESSIVE - DISTRUCTIVE COMPETITION
TOO MANY MODELS AND PLATFORMS
3. DEVELOPING PROBLEMS AT G.M.
SMALL CARS - G.M. LITTLE EXPERIENCE
LEAN PRODUCTION - LOW COST
G.M. EUROPEAN DIVISION HAD THESE SKILLS BUT COULD NOT TRANSFER THEM TO U.S.
4. OIL CRISIS AND JAPANESE COMPETITION
Leadership, Vision, And Mission: Focus
Technology Vs. People
Profit Vs. Market Share
Competition: Quality, Cost, And Product Differentiation
Vertical Integration Vs. Outsourcing
Strategy - Structure Link
EDS And Hughes Aircraft
The Oldsmobile division
THE G.M. VISION GM’s vision is to be the world leader in transportation products and related services. We will earn our customers’ enthusiasm through continuous improvement driven by the integrity, teamwork, and innovation of GM people.
G.M. CASE MISSION STATEMENT G.M. is a multinational corporation engaged in socially responsible operations, worldwide. It is dedicated to provide products and services of such quality that our customers will receive superior value while our employees and business partners will share in our success and our stock-holders will receive a sustained superior return on their investment.
SATISFY CUSTOMERS WITH BETTER PRODUCTS
GROW THE BUSINESS IN FUTURE YEARS
SIZE AND MARKET SHARE
QUALITY IMPROVEMENT AND PERCEPTION THEREOF
MODEL ACCEPTANCE HAS IMPROVED
BENEFITS DERIVED FROM A NEW STRATEGY - STRUCTURE APPORACH AND RELATIONSHIP.
Failure To Make Technology Work
Too Much Vertical Integration
Relationship With UAW
Relationship Of Strategy To Structure
Product Design Problems - Public Acceptance And Reduction Of Cycle Time
Market Share And Profitability
Negative Effects Of Downsizing
Still Much To Learn About Lean Production - High Cost Producer
Hughes Aircraft Situation
USE OF KNOWLEDGE GAINED FROM SATURN EXPERINCE AND TOYOTA (NUMMI) JOINT VENTURE.
EXPANSION OF THEIR GLOBAL PRESENCE - THEIR OWN EUROPEAN MODEL OPERATON AS AN EXAMPLE.
CONTINUE TO BUILD ON THE NEWFOUND CUSTOMER CONFIDENCE.
CHANGING CONSUMER DEMAND FOR NEW MODEL TYPES AND STYLES - EXPANSION AND LEADERSHIP.
DOMESTIC AND FOREIGN COMPETITION
U.S. FEDERAL LEGISLATION AND REGULATION
FOREIGN LEGISLATION AND REGULATION
DECLINING QUALITY OF THE INFASTRUCTURE IN THIS COUNTRY
DECLINING VALUE OF JAPANESE YEN
PRODUCT SEGMENTATION BY PRICE AND FUNCTION
TECHNOLOGY CHANGING IN MFG. PROCESS AND PRODUCT DESIGN
MEGADEALERS AND AUTO SUPERMARKETS
WORLDWIDE DEMAND - STAGNATION - DECLINE
MUST BE WORLD CLASS IN EVERY RESPECT - PRODUCT, MFG. OPERATIONS, FINANCING, AND DISTRIBUTION
Cost - G.M. too high
Quality - G.M. marginal, competition continues to improve
Styling - G.M. must watch
Product line and segmentation - price and function - G.M. OK
Suppliers - G.M. too vertically integrated
Buyers - sport utility and pick-ups
New entrants - not likely a threat
G.M. has been through some difficult times the past 10 years or so and appears to have learned some hard lessons. Based on these lessons G.M. has begun to adopt a strategy of restoring profitability to its North American operations, by aggressive marketing, redesigned products, decentralized MGT style, and a profit rather than a market share goal.
Dropping Unsuccessful Product Lines
Trimming Its Product Line
Reduce the Number of Basic Platforms
Standardizing Component Parts Across Models
Reducing the Number of Parts Needed to Produce a Car
CUT COSTS BY:
Streamlining Operations by Consolidations Within the Corporation
Decentralizing Decision Making
Integration of It Design & MFG Activities
Better Managing Its Supplier Relationships
CUT COSTS BY: con’t
Focus resources on core products, cars, & trucks .
Realignment of organizational structure to support core products and meet costs & quality goals.
Example: self managed creative work teams to figure out how to speed-up product development & improve product development.
Implement common systems & processes where possible.
Balance needs of employees and unions with needs of the company.
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