Kingfisher School of Business and Finance

1131 MacArthur Highway, Lucao District, Dagupan City

A.Y. 2016-2017

MGT 15

CAPACITY PLANNING ON GENERAL MOTORS

Prepared by:

ABRIL, Aljon

De GUZMAN, Jessa

DELA CRUZ, Elyana Sofia

MAGALONG, Eileen

MARCELO, Angelica

RABANAL, Jan Mica

TORRES, Alyssa

VALDEZ, Faye Lyn

Submitted to:

Mr. Mark Jervin Fernandez, CPA

BACKGROUND

General motors, one of the leading car manufacturers began its Indian Operations in

1928. It assembles Chevrolet cars, trucks, and buses that lasted operations in 1954 due to

liberalized of Indian economy. But in 1998, it resumed operations after acquiring the whole

stake in Hindustan Motors and General Motors India Pvt. Ltd. GMIPL (GMI). On April 17, 2007,

it officially launched its “Chevrolet Spark” which intensified the price war in the small car

segment.

The introduction of Spark is expected to increase GM sales. They conducted major

campaign and media coverage but still Spark failed to ignite GM’s fortune. This failure was due

primarily to capacity constraints when Spark hit globally and become the best-selling car in

India. To overcome the problem, the company built a new facility in Talegaon, Maharashta

which became fully operational in 2009. With the new facility, they have solved the capacity

constraint and have even excess production. But unfortunately, due to labor unrest during 2010-

2011 at Gujarat, they suffer production losses. As a consequence, analyst feared that GM might

again face a capacity constraint.

Statement of the problem

STATEMENT OF THE PROBLEM

Company’s sales are expected to increase when a particular product has high demands,

but this can also lead to major problems if capacity is not well planned. This is exactly what GM

faced when they fail to satisfy the high demand on Chevrolet Spark which eventually led to

capacity constraint. The production facility faced with labor unrest which led to production

losses. The facility was built to overcome the capacity constraints and it resulted to an excess

production. Producing more output rather than complying with the capacity planning would lead

to uncertainties. Also General motors might encounter capacity constraints as long as they do

not comply with the capacity planning. With this, General motors must overcome it to prevent

production losses

OBJECTIVES
  To understand, discuss, analyze how General motors entered India through a particular

segment and created a complete product portfolio, in order to cater to all the segments

in the industry.

 Labor is one of the major production factor, without labor there is no production. So, the

company aims to establish a facility that would lead to more efficient and effective flow of

works without discouraging labors and that would result to more outputs and an increase

in profit. Also, it aims to set an effective capacity of the operation so that it could respond

to the demands placed upon it. And to identify ways to minimize or eliminate capacity

constraints that prevents a business from achieving more output.

AREAS OF COMPETENCIES

General motors has its competencies in terms of leadership, career motivation and

decision-making despite the fact that it has encountered lots of problems concerning capacity

planning, its excellency in making decisions contributed to its solution to the problem. Career

motivation helps a lot especially during those times that its status is not well because of the

problem caused by the capacity planning. Areas of competencies are very important in the

business because it will help the corporation continue with its operations. General Motors

provide quality products in terms of comfort for its customers and performance.

ALTERNATIVE COURSE OF ACTION

1. Suspend some workers to reduce expenses due to labor unrest.

2. Enter into another business to utilize the excessive capacity.

3. Change its labor force into a unionized one to prevent and minimize the strike from

workers.

4. Do nothing.

CONSLUSION AND RECOMMENDATION

The business’ loss was majorly caused by the labor unrest or strike in which employees

were taking an industrial action against the General Motors instead of working that causes the

loss in the production area. Though explanations are not mentioned as to why these employees

take a strike against the company, different reasons can be concluded such as the business

may not be giving the right compensation to its workers despite their excessive working hours or
unfair labor practice or employee’s health and safety conditions are at risk. Being engaged in

another business will lead to additional customers and more profit that could cover the loss in

the production made by labor unrest.