Gm Case

1. Why did GM Brazil decide to change the way they were doing business in the spare

parts market?

GM Brazil decided to change the way they were doing business in the spare parts market because the service parts business was a profitable business and there was an increase in competition when the Brazilian government open up the market for both imported cars and foreign countries who wanted to start up plants in Brazil. This liberation attracted competitors such as Toyota, Mercedes-Benz, Honda, Chrysler, etc. who invested largely in the automotive market in Brazil. This caused GM to tighten their costs further on the low profit margin, compact car segment. In addition, according to the case, the service parts business has serious strategic implication for a new car business because it can affect the level of serviceability which is measured in time, speed, price and dependability of the car during its economic life and therefore the very attractiveness of the car from the point of view of the prospective new car buyer. Therefore, it is with these understanding GM decided to change the way they were doing business in the spare parts market.

2. What are the advantages and disadvantages of AutoGIRO to the companies involved?

Advantages of the AutoGIRO for the dealers include an increase in the availability of parts through the “parts locator”. This would allow dealers to get parts available to their customers faster; for instance, the case explained in the case of a stock out, a dealer with an urgency to serve a customer could browse on their extranet and search for that part availability at a dealership nearby, potentially getting the part the same day, depending on the dealer’s location. Another advantage is a reduction of cycle stocks at the point of sale due to the higher frequency of replenishment. Also, there would be a reduction in the bullwhip effect; as were learned in class, the bullwhip effect is when there is poor forecasting which results in either too...