2. GM Relationship Types
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GM
JV with
Toyota
Partnership
with Small
Asian car
makers
Fanuc Joint
Venture
Alliance
with parts
makers
General Motors’ Asian Alliance
3. Joint Venture with Toyota
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• 50-50 JV established in 1983
• Invested $100 million eachNUMMI
• Approved by a three-to-two votes
• JV could only run till 1996FTC
• 200,000 cars per year
• Chevrolet NovaProduct
• Gain quick access to a world class small car (Nova)
• To learn about Toyota’s production systemGM’s Reasons
• Familiarize itself with US market to establish long term presence there
• To get around export restraints by manufacturing in USToyota’s Reasons
General Motors’ Asian Alliance
4. Result of GM-Toyota JV
Drop in absenteeism from 22% to 2%
Produce 60 cars with 1/3 workforce
Toyota decided to manufacture Corolla FX-16 and Camrys also at the plant
GM implemented learning from NUMMI to other plants
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5. Partnership with Small Asian car makers
• Isuzu produced two
vehicles for GM to sell in
the US (Chevy
Luv, Spectrums)
• GM Spectrums comprised
nearly 40% of Isuzu’s total
production
Isuzu
• JV to manufacture small
passenger cars
• Daewoo entered into JV for
capital and technology
• Daewoo’s export accounted
for 10% of all South Korean
exports
Daewoo • Manufactured Sprints for
Gm
• Established plant in
Canada to manufacture the
Sprint for GM and the
Samurai SUV for Suzuki
Suzuki
• GM and Nissan were
having trouble in Australia
• Jointly produced Astra and
VL Commodore
• Nissan, GM and Deawoo
produced passenger cars for
sale in Korea and US
Nissan
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6. GM-Fanuc Joint Venture
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Need:
•GM largest buyer of robotic system in US
•Desire to large-scale modernization of its plants
•Dissatisfied with its present robotics vendors
GM Fanuc Robotics Corporation (GMF) was intended to operate independently of the two parent
companies
75% of units manufactured by JV
was sold to GM & rest to other auto
companies
GMF coordinated with GM and
Fanuc to develop proprietary
robotics technology
7. Alliance with Japanese parts makers
Hitachi:
Microcomputerized
control for + Robots
for Gm plants
Nihon Radiator:
Next-generation
compressor for A.C.
(V5 compressor)
Atsugi: Sells sensor to
Monroe, which sells
suspension system to
GM
Akebono Brakes: 50-
50 JV to manufacture
next-gen drum and
disk brakes using
electronic tech.
NHK Spring: the JV
produced fiber
reinforced plastic
suspension spring for
GM
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8. Key Problems
NUMMI
• GM had little control even after providing half the cash and
use of its production facility
• NUMMI had given Toyota the opportunity to familiarize
itself with doing business in GM’s home market – US
Isuzu
• Isuzu received considerable financial and technical support
from GM and was free to use it in developing its own
products
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9. Key Problems contd..
Daewoo:
• GM gave up management control of ventures into which it had placed capital
and technology, allowing Daewoo free reign with all the resources provided
by GM
• GM lead Daewoo to become a major player in South Korean market and in
return received a car which was already developed by its Opel subsidiary
Suzuki
• The JV provided Suzuki an opportunity to greatly expand its manufacturing
and marketing operations outside Japan, GM was only able to export 4000
vehicles into Japan
• Suzuki’s JV with Izuzu increased the likelihood of Suzuki supporting
vehicles that could compete with GM
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10. Key Problems contd..
Fanuc
• GMF was taking on the high-cost and low-return work of
installing and supporting robotics system while providing
new sales opportunities for Fanuc’s hardware
• Low level of trust in partner which handicapped product
development efforts
Parts and Components makers:
• Issue of loyalty
• Risk of information leakage to Japanese competitors
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11. Core Problem with GM JVs
• Greater benefits for partners than for GM
• GM failed to demand proper return for its investments,
loyalty and proper level of control
• GM failed to find the right partners which would
• Help achieve its strategic goals
• Share its vision
• Not try to exploit the alliance for its own agenda
• GM failed to acquire most knowledge possible about
potential partners owing to its status as a relative newcomer
to Asian market
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13. Withdrawal/Centralization
• Toyota Keiretsu style High degree of centralization High level of
control
• GM problems loose relationships, solutions limiting business
dealings ( with those who not willing to fall under its authority )
• Advantages:
• Lighter control structure
• More discipline and develop closer and more loyal relationships
• Geographical proximity will lead to efficient distribution system
• Disadvantages:
• Limited its ability to innovate
• Adversarial relationship with domestic automotive manufacturers
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14. Decentralization/Globalization
• GM’s 1966 Policy : coordinated policy control of all of its operations through the world
• Lead to aggressively pursuing new opportunities & was motive behind its many Asian partnerships
• GM can continue in its direction and learn from its mistakes and find best solution to its problems
• Advantages:
• Business at global scale Economies of scope
• Widest range of suppliers and partners(Best cost & quality)
• Remain truly international
• Disadvantages:
• Difficult to manage wide range of partnerships
• Trade-offs between trust and control
• Risk of losing knowledge and tech. to competitors
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15. Ownership and Effective Equity
• GM didn’t have much control over its resources, knowledge, and technology where in its
partnerships.
• It can invest in only those partnerships where it does not have financial leverage so that it
does not loose any control.
• Advantages:
• Dictate the terms of partnerships
• Can force suppliers to prioritize
• Harder for companies to end partnerships and start independent operations
• Disadvantages:
• Limit its options for suppliers
• Dependent on equity providers
• Ownership may not be desirable in each partnership
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16. Recommendation
• Global markets are going through tremendous change, implementing any one
alternative may not work in all markets.
• GM should analyze all its current partnerships and determine pros and cons of
implementing each alternative.
• Implement that strategy which will generate best result in GM’s interest and
maximize return.
• In terms of loyalty of suppliers and its partners:
• GM should understand that cross cultural differences take longest time to
overcome.
• It has to build long term relationships with its suppliers and partners which will
help in building trust and loyalty towards GM.
• Finally GM should accept that not all of its partnerships will succeed, some will
fail which will give be a lesson to strengthen its other relationships.
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