Toyota-GE case Analysis

Topics: NUMMI, General Motors, Automotive industry Pages: 3 (732 words) Published: June 28, 2014

The world’s largest car manufacturers Japan-based Toyota and and US-based General Motors [GM] have joined together in Australia to create a joint venture under a new company called United Australian Automotive Industries [UAAI]. This is hoped to see replication of same success as the New United Motor Manufacturing Inc venture between Toyota and GM in California, but this was not to be the case due to various internal and external factors. The joint venture which involved a lot of process of analysis, study and negotiation spread over six months was not able to stand more than 2 years due to conflict of interests in benefit sharing and failure to forecast changes in the national economies, refusal to follow accepted strategy implementation between the two companies TMC and GMC. PROBLEM IDENTIFICATION

Absence of strategy to tackle impact of international markets and economy fluctuations on the UAAI company’s performance. The venture being a multi national presence, should forecast changes in the economies. The appreciation of Yen against Australian Dollar lead to direct depreciation in Toyota’s profits but not UAAI’s. One partner benefitting and the other not is a matter of serious concern in keeping the joint venture afloat. SECONDARY

Disagreement to the previously accepted terms by Toyota due to unexpected results i.e occurance of loss in exporting valuable parts manufactured in Japan, such as the front wheel drive gear box/differential units due to appreciation of Yen against Aus Dollar. Greater outlay for production of Toyota cars in UAAI restricted its ability to reap the benefits of economies of scale. These problems were the first signs that the alliance was starting to ‘crack. SWOT

Meeting the volume production schedule
Reducing wasteful duplication
Creating a powerful sales-force
Decrease in car prices to...
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