Shanghai General Motors

Shanghai General Motors

I found this case and the questions about it very interesting and thought provoking. In this write up I have chosen to answer the last three questions posed, questions 4, 5 and 6. The forth question asked about GM’s strategic rationale, the fifth question asked how GM’s innovation in each value chain function improved its market position and the last question asked how SAIC-GM fit into GM’s plan to increase its market share in Asia. I will attempt to briefly explain what I believe to be the answers to these questions.

GM’s strategic rationale consisted of positioning themselves in the market initially by building a comprehensive product line that would satisfy the diverse and ever changing needs of Asian consumers and outpace market demand. GM was committed to bringing their cutting edge technology to China to help them build one of the largest and most advanced automobile industries in the world. They ultimately wanted to penetrate the market over time and gain a solid foot hold in China by building a holistic supply chain. What GM called their “whole system”. GM’s “whole system” strategy was to not only provide the vehicle but, to control distribution, brand their name by providing great customer service and to have parts available to repair any product failures. GM believed with this strategy in place no one could bring a (product only) to Asia and beat their brand in sales and market share.

GM was very innovative in each of the five main value chain functions and that improved its market position greatly. In the beginning they were innovative in the area of inbound logistics in that they partnered with SAIC who already had manufacturing plants in China. As time went on they built state-of-the-art facilities and made deals with local companies to set up a domestic supply system so parts and materials would be readily available. From an operations aspect GM built all their plants to the same specifications. This allowed GM to build...