What are the advantages and disadvantages of General Motors’ strategy for operations?
GM is now using Toyota’s strategy (partnerships and alliances) for operation in its newest factories, located in Argentina, Poland, and China. The advantages of GM’s strategy for operations are: i)
Standardized plants helped cut production costs substantially and allow it to succeed in the world’s emerging markets. ii)
Factories are designed with flexibility and efficiency so that each factory can be easily expanded if demand warrant higher production. Plants are designed with flexibility and efficiency in mind so that each factory can be easily expanded if demand warrant higher production. The U shape design of the factories help suppliers to deliver component parts and accessories directly to the assembly lines, cutting down on warehouse costs and improving productivity. The disadvantages of GM’s strategy for operations are:
Since plants are similar to one another, GM had to make adjustments in each to meet unique conditions in each country. (e.g. Poor infrastructure posed challenges in managing JIT system in China) ii)
GM’s international strategy has been rather typical. First, it exports, then builds local subsidiaries (i.e., Germany and Argentina), then joint ventures (the NUMMI plant with Toyota in Fremont, California), but is now moving toward a global strategy. The global strategy will provide a standardized (if not identical) product with economies of scale. GM hopes this approach will allow it to succeed in emerging markets.
In which businesses is this strategy appropriate, and in which businesses might it be less appropriate?
This strategy is appropriate in those industries where the demand for local customization or responsiveness to local tastes is overwhelmed by economies of scale. A global strategy such as this is not appropriate in other industries where local and changing tastes dominate (i.e., food, cosmetics, some clothes, etc.)....
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