1. General Motors
Strategic Management-2
1
Group 5
Anand Kumar 12P127
Ankush Singla 12P129
Bhoomi Ashwin 12P131
Aditya Ram Chadha 12P132
Siddharth Bharadwaj 12P170
Soumyajit Sengupta 12P171
Asian Alliances

2. General Motors: Strategic Alliances
Unified ownership for coordinated policy control of all operations throughout
the world is essential for effective performance as a global organization
Rationale
General
Motors
Toyota
Isuzu
Suzuki
NissanDaewoo
Fanuc
Ancillaries
Joint Venture
Equity Strategic Alliance
Equity Strategic Alliance
Non-Equity Strategic AllianceJoint Venture
Joint Venture
Hitachi, Nihon, Atsugi, Kyoritsu,
Tachikawa, Akebono, NHK
Backdrop
Earnings
Market Share
4.5  2.9 bil
Below 40%

3. General Motors-Toyota Joint Venture: NUMMI
General Motors
• Gain access to a small car to
help expand its portfolio
• Learn about the famous
Toyota Production System
Toyota
• Get around the Voluntary Export
Restraints (VERs) agreed to by the
Japanese government with USA
• To familiarize itself with US
Markets
Parameter Description
Cash Contribution $200 million ( $100 million each by Toyota & GM)
Plant Fremont, California
Board Independent
Board Composition President, CEO & Top Officials (Toyota); 16 Executives (Maximum) (GM)
Annual Production Capacity 200,000
Apparent Benefits

4. General Motors: Other Alliances
GM paid $56 million for 34.2% stake at a
period when ISUZU was struggling
GM would assist in
designing, developing, manufacturing and
distribute through its global network
GM made agreement with ISUZU for
building R&D and supply of engines, parts
NISSAN was the fourth largest auto maker &
a large industrial group like Toyota
Nissan was supplying Engines and
Transmissions, while GM was supplying
panels and Nissan was supplying Pulsar
which was sold by GM under the name Astra
GM paid $35 million for 5.3% stake in
Suzuki,
Suzuki was looking for an International
Partner, while GM was looking for better
technology, lower production costs
DAEWOO – Korean conglomerate
group, second largest automobile maker in
Korea
GM would take management control as
Daewoo suffered heavy losses in preceding
four years
GM supplied Opel engines and formed JV
for building parts R&D with Daewoo
subsidiaries
GM-Isuzu
GM-Nissan
GM-Daewoo
GM-Suzuki

5. General Motors and
FANUC each invested $5
million and created GM
Fanuc Robotics
Corporation (GMF)
GM was the largest buyer
of robotics systems in the
United States, buying a full
third of robots sold in the
country, was dissatisfied
with its present robotics
vendors, GM wanted to
sell their products & guard
against losing personnel to
competitors
Fanuc was looking to build
its robotics business at a
period of economic
slowdown, competition
and was seeking intelligent
robot technology present
in U.S
General Motors – Fanuc Joint Venture: GMF

6. General Motors’ Alliances with Ancillaries Manufacturers
•Japanese equivalent of GE
•Cooperative development and production in 5 areas
•GM announced a long term agreement to buy electronic systems
Hitachi
•Joint venture to produce next gen compressors designed by GM
•GM wanted to capture the Japanese Auto market
•Nihon wanted to gain access to technology
Nihon Radiator
•Atsugi to supply parts and accessories
•GM to provide technical assistance
Atsugi
•GM purchases 20% & shares Investor
Kyoritsu
•Supply seat cover technology to GM
•Advanced technology not used at the time
Tachikawa Spring
•Owners were fierce rivals such as Toyota & Nissan.
•Falling market share
•Had world class technology that cost 20% less
•GM to provide its electronics expertise and technology
Akebono Brakes
•Largest producer of auto spring in the world
•No deep rooted affiliations with any auto makers
•GM interested in its new Fibre Reinforced plastic springs cutting weight by 32 to 54 pounds
NHK Spring

7. Analysis of External Industrial Parameters on Firm
Industrial Organization Model
External
Environment
Globalisation, Technological advances. The 70’s era was of technological innovations and
improvements with increasing imports and U.S auto makers were suffering.
Attractive Industry
Imports were increasing and the BIG THREE were suffering with their
engineering, manufacturing and marketing efforts
Strategy Formulation
U.S Auto firms to fight competition and to improve their positions were forming
cooperative alliances with Asian companies
Assets and Skills
U.S Auto companies were looking for Cost Minimisation and Value Maximisation
i.e. were acquiring low cost technologies, improvements and practices of industry
Strategy
Implementation
Ford invested in Mazda, Chrysler invested in Mitsubishi & GM invested in Japanese and
Korean companies
Superior Returns
Alliances formed joint R&D, supplied parts and engines and Japanese company cars
were released under GM names – Opel, Pontiac etc.

8. Core Problem in General Motors’ Strategic Alliances
• General Motors’ Asian business partners have often benefited from GM investments of
effort, financing, and knowledge, and used this to compete with the company, either directly
or indirectly.
• The Fanuc partnership, which was undertaken in less than three months, is one example of
a partnership which was undertaken too quickly.
0
5
10
15
20
25
30
35
40
45
50
1978 1980 1982 1984 1986 1987
GM Market Share in
USA (%)
%
* Source :-VEHICLE CHOICE BEHAVIOR AND THE DECLINING MARKET SHARE OF U.S. AUTOMAKERS, INTERNATIONAL ECONOMIC
REVIEW
Vol. 48, No. 4, November 2007
Main Reasons
• Loss of Control
• Lack of Knowledge Protection
• Short Term Growth Orientation
• Declining In-House Product Development Capability

9. Probable Solutions
Centralization
Pros
• Based on a tried
& tested formula
(Toyota)
• Greater
Discipline
• Better
Relationships
• Better Supplier
Monitoring
Cons
• Innovation
Capability
Limited
• Hindered First
Mover
Advantage
Effective
Ownership
Pros
• Greater
Management
Leverage
• Ability to Hinder
Partners turning
Probable
Competitors
Cons
• Greater Costs
Incurred
• Flexibility with
respect to
Suppliers would
be hindered
• May lead to
Disruptions
caused by an
Equity Partner, if
any
Decentralization
Pros
• Easier to Operate
on a Global Scale
• Better First
Mover
Opportunities
• Greater Supplier
Base
• Would remain
true to the Vision
outlined
Cons
• Difficulty in
managing wide-
ranging alliances
• Difficult to
manage
Distribution
networks with
Suppliers
• Chances of
Creating New
Competitors

10. Thank You!