GM case study

GM case study

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The action plan of GM should be to extensively evaluate all of their foreign alliances, and through analysis determine the overall benefits of each of their partnerships. GM should eliminate any alliances, which are not beneficial to the firm, or could be seen as not mutually beneficial between both GM and the partner alliance. Alliances, which are not mutually beneficial or more beneficial to one of the firms, are generally viewed as more advantageous and opportunistic rather than as beneficial partnership where the two firms help each other acting as partners. Alliances where one firm benefits more than the other usually do not last for long periods of time and can harm one or both of the firms in the long run. In such cases, the partnership should be either eliminated, or avoided in the future.

     The short-term goals of GM should mostly be of an evaluative nature. GM needs to collect and gather data on each of their foreign partnerships. The financial, informational and opportunistic advantages of each alliance should be analyzed and evaluated to determine GM’s overall need for and benefits from each particular alliance. Longevity should also be considered. Alliances taken on only for short term benefits could ending up costing GM more than they gained in lost information, technology or competitive supremacy over an allied firm. Firms should be evaluated only on the long-term benefits of the partnership. Long-term partnerships are the only true beneficial alliances on this case. The reason for the other firms desire and reason to partner with GM should also be analyzed to ensure that neither firm’s corporate goals are of conflicting nature. Mutually beneficial alliances are much more successful in the long term and can lead to long lasting, highly profitable and beneficial arrangements.
     GM should begin to eliminate their lesser alliances, alliances, which are only advantageous in the short-term, and alliances which tend to be more beneficial to the foreign firm. This however, should be done cautiously and contractually to ensure as little information knowledge, technological knowledge and operational knowledge are lost or transferred to the separated firm. Former partners have a distinct advantage over other competitors to steal some portion of the market share. Also in the medium-term, GM should further coordinate with their strong partner firms to attempt to exploit as many advantages from each other as they can. Partner firms who are suppliers to GM should be fully integrated into the supply chain, and some elements of each firms corporate structure and policy should become transparent to further benefit both firms.

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     In the long-term, GM should have separated completely from all or most of its non-beneficial alliances. Strong alliances should be strengthened to the point of full partnership of truly beneficial partners. GM should also look to make new alliances in the future to continually improve their supply network, technological knowledge, quality control measures and competitiveness within their industry.

     One alternative for GM would be to re-evaluate their partner selection process. In the case, it seems as if most GM’s partner firms gained more from the partnership with GM than did GM gain form the partnership. In most cases, foreign firms allied with GM to gain access to a new or expanded market for their automobiles. GM’s goals although fundamentally were anticipated to gain knowledge from foreign firms ultimately became directed solely at gaining profits. GM needs to re-evaluate not only how they select their partners, but for what precise reasons. GM needs to select partners that help the firm achieve its strategic goals. In this case gaining access to critical core competencies that Japanese manufacturers possessed. Second, to be a good partner for GM, the firm needs to share the firm’s vision for the purpose of the alliance. Most of GM’s alliances do not seem to share the same agenda, greatly increasing the chance that “the relationship will not be harmonious, will not flourish and will end in divorce.” Lastly, GM needs to identify whether its partner firm is trying to opportunistically exploit the alliance for its own ends, exploiting the partner firm while providing little in return. This seems to be evident in many of GM’s alliances where foreign firms retain all control over the company and its decision making, while taking on GM mostly as a financial partner; these are trying to exploit GM’s knowledge of the US distribution and operational practices while providing little in return.

Another alternative for GM is to re-evaluate their reasons for entering into a strategic partnership as well as how they utilize their strategic alliances. GM historically seems to have viewed alliances mostly as “cost-sharing or risk-sharing devices, rather than as an opportunity to learn how a potential competitor does business.” This is evident in the NUMMI case. Partnering with Toyota to build a plant in Southern California, GM was poised to be in a terrific opportunity to learn a great deal about the Japanese production process. The goal of the partnership was to gain quick access to the small car market and to learn about the Japanese production process. They had a unique opportunity to learn about quality control techniques and worker productivity methods. Instead however, GM used the partnership to gain only a new product instead, the Chevrolet Nova, which was not a particular success any ways. In this case GM had the chance to benefit on two levels. One benefit would be the diffusion of Japanese methods, policy and work culture, and secondly the production of a successful product. However GM failed on both fronts. They learned only a fraction of what they potentially could have from the Japanese and the Nova was more or less a failure in the US market. Comparatively, the Nova, sold as the Toyota Corolla, was very successful for Toyota. The opportunity to gain invaluable knowledge form Toyota was sacrificed in an effort to gain immediate success in a new car market.
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