General Motors is an American multinational with headquarters in Detroit that design, manufactures, and distributes and markets automobiles and their spare parts and offers financial services across the world. In 2009, a public offering was made and became a public company. GM has 13 brands that are sold across thirteen countries. It has entered in joint ventures with several firms across the globe as a strategy to enter the market in different economies. The manner in which GM meets the needs of its clients mostly depends on the market segment; however, GM remains among the leaders in automobile industry across the globe. This essay evaluates the manner in which the operation of GM in North America differs with the operations of GM in Asia. It is imperative to note that in Asia; most of the GM operations are through joint ventures.
In Asia, there exist a great opportunity for GM, even though there is vast competition from other established automobile manufacturers such as Toyota among others. The competition policies in Asia are similar to the international standards, and there is skilled labor whose migration is not limited. The major differences in policies between the operations in GM operations is that in Asia, there are less strict labor laws and there exist cheap labor compared to the United States of America. More so, in Asia, the infrastructure is less developed in some economies than others, hence requiring GM to invest heavily in the in infrastructure. Although General Motors outsources some of the key inputs from others economies, in Asia, most of the product are made in Asia, or outsourced within the Asian alliances (Hogan, 1999).
In Asia, GM faced several challenges due to the differences in business requirements and existences of competitors. It was critical to address the challenges faced by GM in Asia for its survival. Some of the challenges required simple policy changes while others required changes that were deep rooted, which could affect the corporate values and philosophies. Among the key strategies that the management in Asia considered was to establish a strong relationship with partners and suppliers. This is after considering that Toyota, GM’s principle competitors focused on long term solid relationship with its suppliers and partners for survival. Thus, GM focused on establishing stable long term relationship that would make the suppliers loyal and thus reduce conflicts and guarantee stability of the supplies. That would eventually enhance productivity and knowledge security along with production know how at General motors (Farber, 2002).
The management at GM needed to have more control in the management for the major investments that it had made. GM had invested heavily in Daewoo and NUMMI; however, it had limited managerial control. Although there were situations where GM had major control in order to protect its investments, this was not the case in Daewoo and NUMMI, thus, it decided to have majority control in businesses where it had made major investment. Another management approach that made GM to succeed in Asia is the need to protect its technologies and knowledge. In order to beat its competitors, GM required to protect its assets that include technology and knowledge. This is through putting in place stricter measures to protect knowledge; whilst ensuring a closer relationship with those who have critical information concerning its technologies (Barabba, 2004). Another approach that the management employed to make G successful in Asia is constant improvement of the products. The firm had to do away with the goal of developing a small economy car but focus on the needs of its clients. GM had to invest in market research and establish the needs of the diverse Asian market and make decisions that would make it to remain at a competitive advantage (Richard &Walter, 2013).
There are some instances where GM failed after making some wrong management decisions. For example, the decision to allow Daewoo to manage GM’s resources through management control resulted to Daewoo becoming a major automobile player in South Korea at the expense of GM. GM only got Opel in return; an economy car that GM would have manufactured without much investments stress. Another management decision that was unsuccessful was the decision to open a joint venture with Suzuki. The major reason for the venture by GM was to support Suzuki develops a small economy car, while Suzuki was looking for a global partner who could make the firm gain international market. Thus, Suzuki would gain at the expense of GM by escaping the Japanese market. Suzuki succeeded to access market outside Japan, while GM did not manage to gain a reasonable market share in Japan.
The managerial decisions are affected by different factors. Different economies have different business norms; therefore, managers have to consider the business norms in a respective economy before making their investment decisions across borders. The economic conditions along with the social background, such as religion, are very important while making the business regulations. Therefore, these factors differ across the globe and managers need to learn about the economic, social and political conditions before making the decisions in order to avoid conflicts.
The differences between the operations of GM in Asia and GM in United States of America is attributed to the differences in respect to the political, economic, and social environment. The fact that GM is a global brand name played a key role in its success in Asia, however, that has not been realized without some failures here and there. The approach by the experienced GM management in Asia played a key role to enable GM to win a reasonable market share in Asia.
Barabba, V. P. (2004). Surviving Transformation: Lessons from GM's Surprising Turnaround. New York: Oxford University Press
Farber, D. R. (2002). Sloan Rules: Alfred P. Sloan and the Triumph of General Motors. Chicago: University of Chicago Press.
Hogan, M. (1999). The General Motors- Toyota joint venture: a General Motors perspective. The antitrust bulletin, 44(4), 831-839.
Richard S, Jr. & Walter, M. (2013). GENERAL MOTORS' ROAD TO RECOVERY. Michigan Sociological Review, 1(27),1-34.