The Universal Motor Company

Case Study Title: The Universal Motor Company

1. Major Facts / Major Problems:

- During the late 1970s the U.S. government began to addressing the air pollution issue by establishing vehicle emissions standards and corporate average fuel computation targets for vehicles sold in the United States. The auto industry was faced with major technical problems. The U.S government-mandated standards could not be achieved with the available technology. These mandated standards required the auto industry to design engine control computers to manage engine efficiency more precisely.

- The design engineers were incredibly short in supply .There were fewer semiconductors design engineers in the world than there were professional football players in the NFL.

- A team of company experts including engineering, quality, supply, and manufacturing professionals was assigned to develop a program analyzing the semiconductor industry. Both primary and secondary researches were conducted. The research led Universal executives to conclude that the decision was more complicated than simply deciding whether to acquire a semiconductor facility or buy the required components. It became apparent that the semiconductor make-or-buy issue consisted of many subissues. Accordingly, the entire process of designing, manufacturing, and testing semiconductors was broken down into stages.

- The issue of testing of the packaged semiconductor devices was extremely critical to Universal. The issue had to do with the relative value of a semiconductor to the various suppliers and to Universal. A semiconductor sold for $1 to $3, while an automobile, dependent on the semiconductor’s performance, sold for $10,000 to $30,000 (1980 dollars). A $1 to $3 component could easily (and all too frequently did) cause a $20,000 automobile to malfunction, requiring the owner of the automobile to call a tow truck, pay for the tow truck, and have the vehicle towed in for repairs costing several hundred...