CASE STUDY 14

GM: Its Rocky In

Recovery

Time Context
1978
Viewpoint
oProduction Manager
oProduction Workers

Central Problem
The main problem faced by
GM are declining US
Automobile market share, Lack
of differentiated products,
inability to generate revenues
from its core activity
(Manufacture of cars)
overdependence on its
financing division, inefficient

Statement of Objectives
To be able to know the
possible cause of GMs
productivity decline.
To be aware of whats the
effect of GMs productivity
decline on its cost
efficiency, production and
profit.
Critically, analyze how GMs

Areas of Consideration
SWOT Analysis of GM
Internal Environment
Strengths
Global presence
Strong knowledge of home
market
One of the oldest
manufactures
Large skilled employee
base

Weaknesses
High cost structure
Sensitive to fuel prices
Lack of innovation
Poor quality and repetitive
designs
Less use of cutting edge
technology
Little diversification
Bureaucracy

External Environment
Opportunities
Opportunities in
emerging markets
Growing economy of car
market
Demand for hybrid
electric vehicles
New vehicles styles and
model

Threats
Global economic
recession
Rising fuel prices
Rising raw materials
supply cost

Alternative Courses of Action

1. Company should cut their cost
Advantages
Lower costs
Increase profitability
Disadvantages
Lower quality of products
Customer dissatisfaction
Loss of employee loyalty

2. Company should maintain a

good relationship to a single
supplier
Advantages
Pricing discounts
Competitiveness
Innovation
Finance
VAT mitigation
Brand and environmental
compliance

 Disadvantages
Highly dependent on a
single supplier, to give all
the raw materials needed.
So In case an unforeseen
event happens that affect
supplier adversely, the
business will likewise suffer

3. Company should focus on their low

cost and differentiated strategy
.Low cost strategy
Advantages
Risk avoidance by customers
Strong market presence
Disadvantages
Cost reduction easily imitated by
other firms
High level of asset commitment
and capital intensive activities

 Differentiated Strategy
Advantages
Increase potential
market share that a firm
can gain
Provide a highly
distinctive products that
make it difficult for new
entrants to compete with
the reputation and skills

 Disadvantage
Other firms may attempt
to "out differentiate".

Final Decisions
GMs approach to suppliers
needs to be part of your
strategic plan since almost
every company, whether
product or service oriented, is
dependent on suppliers. Many
business owners seem to get
this supplier issue backwards.
They think that because they
write the order, theyre in the
dominant position and can
exploit it with unreasonable
demands, including personal

Detailed Action Plan

Once you have chosen your

suppliers, it is important to develop
a productive and professional
relationship.
The following tips will help to
maintain positive relationship with
your suppliers.

1. Talk regularly and honesty with

your suppliers.
2. Set up standardized ordering
processes that both parties can

4. Pay your accounts on time.

5. Avoid making unrealistic
demands for products and
services.
6. Return defective supplies
promptly.
7. Monitor and review your
suppliers performance and
measure it against your
competitors.
8. Be sure to carefully examine

Reported by:
Solibio, Andy
De Castro, Joana
Maicha
Almazan, Glory May
Arellano, Apollo