General Motors and Chinese Joint Ventures & Ford Global Platform Strategy

This presentation on International Business covers General Motors and Chinese Joint Ventures and Ford Global Platform Strategy. The first section discusses GM's joint venture with SAIC in the Chinese automotive market, the potential risks, and why GM did not license its technology to SAIC. The second section covers Ford's strategy before Alan Mullaly, the benefits of standard platform, and recommendations for Ford strategy. The presentation also includes personal reflections and references.

INTERNATIONAL
BUSINESS
General Motors and Chinese Joint Ventures
&
Ford Global Platform Strategy

A. General Motors and Chinese Joint
Ventures
 The case scenario gives an overview of the GM motor joint venture with
SAIC in the Chinese automotive market that has ensured the success of
the company in the international market.
 The company was attracted to China’s potential market created with its
1.4 billion population and other investment opportunities.
 The company has a result has increased its manufacturing capacity in the
country to match the high demand and is expected to increase production
due to forested increase in demand.
 The demand for the vehicle in the Chinese market is expected to increase
from 28 million to 35 million in 2022.
 This requires the company to increase its production capacity and GM
motors are building more factories in China for this demand.

GM entered the Chinese market when
demand was very limited
 The GM motors company entered the Chinese market at the time
when the demand was limited since the company was attracted to
the potential market.
 The population of the country of 1.4 billion people was a potential
market that attracted the GM motors company to venture into the
Chinese market.
 the company was also attracted to the growth that China was
experiencing at the time of investment into the country.
 This offered enormous potential for the company’s vehicles
(Naughton, 2013).

Why GM entered the Chinese market
through a joint venture with SAIC
 Firstly, the company lacked knowledge and connection in China to enter the
market alone.
 Entering the market through a joint venture with a Chinese company would,
therefore, ensure that the company has connection required for successful
business operations.
 Secondly, the Chinese government regulations made it impossible to enter
the market without a joint venture.
 Entering the country’s vehicle market through joint venture made the
company allowed to operate in the country freely by the Chinese
government (Krisher, 2017).

Potential Risks
 The company risks losing financial capability since it has limited
knowledge and connection in the country that was necessary for
investment.
 Knowledge and culture that ensure international business pose a risk
to GM motors venture with SAIC.
 The lack of assets protection in the country also poses risk to GM
motors as a result of a joint venture.
 These potential risks may lead to loss of money or capital that is
invested in the Chinese market (Neal & Terlep, 2010).

Why GM did not license its technology to
SAIC
 Firstly, the company was anticipating some risk in the Chinese
market.
 Secondly, GM motor was complying with the government
regulation that required joint venture.
 The company designed cars that match the market demand as
opposed to SUVs that were sold in America (Naughton, 2013).

Why joint venture has been successful
 The GM motors and SAIC joint venture has been successful due to the car
design of the company that meets the Chinese market demand.
 The company designed car especially the Wuling sunshine minivan that is
light, consume little fuel and meet the market demand.
 The care has made the company sell more cars under this model within the
country making the company successful in the market.
 The cost of the car is also relatively low as compared to other products
produced by the company or its competitors in the market (Bomey, 2012).

GM increase commitment to China
 Firstly, the market forecast indicates that the Chinese vehicle market will
experience an increasing demand for more vehicle.
 The Chinese vehicle market is booming and demand is expected to increase from
28 million to 35 million by 2022.
 Secondly, the low vehicle market penetration in the Chinese market still create
demand for the future market.
 The Chinese market statistics show that for every 1000 people the number of
vehicles is 85 as compared to the United States where every 1000 people there is
800 vehicle.
 This show that the number of vehicles that is still need in China is high as
compared to GM country of origin, the United States (Burden,2017).

Personal reflection
 Firstly, I think the company attraction to the high demand ensures growth and this is also part of
success.
 Investment is a promising market to ensure that the company grows to compete with other
producers such as Volkswagen.
 Secondly, profitability is a primary goal of every global company and GM motors investing in the
profitable Chinese market is the right thing to do.
 The booming car business in China symbolizes profitability and this makes the company
continue investing in the market.
 Thirdly, being successfully come out of bankruptcy state through investing in the Chinese market
needs continuous expansion.
 The company has experience bankruptcy protection prior to venturing in the Chinese market and
success in the Chinese market ensure that the company continues to stabilize its operations
(Kwong, 2017).

B. Ford Global Platform Strategy
 Ford Global Strategy case scenario give the strategy that Ford motors used prior
to the Alan Mullaly as its CEO and other strategies that have been used to
ensure the company remains competitive in the market.
 The company changed its regional model that focuses on manufacturing cars
under two different platform, one for Europe and another for the United States
of America.
 The strategy was changed to bring standard building platform that ensures
different cars can be built on the same platform.
 As a result, Ford will increase its production cost and an increased number of
cars that are produced from 3.9 vehicles per platform to 5.7 vehicles per
platform by 2020

Strategy Ford used before Alan Mullaly
 The strategy that Ford used prior to the coming of Alan Mullaly was the
regional model that has some characteristics.
 Firstly, the strategy has two platforms for different regions that were used to
produce different Ford care for different regions.
 Secondly, platforms that were used in car production were different and care
was equally different.
 Thirdly, the strategy considered customer taste from various regions (Dee-Ann
& Krisher, 2014).

Benefits of standard platform
 Firstly, standardized car manufacturing strategy ensures the transfer of
knowledge and technology from one factory to another.
 Ford indicates that standard platform will reduce cost by $50 billion annually
hence reducing the overall cost of $1 billion by one third.
 Secondly, the standard platform is beneficial for cost reduction as car parts from
one factory can be used in another factory for the speeding car production
process.
 Thirdly, increase car production as many different car models can be built on the
same platform thereby increasing production from initial 3.9 vehicles to 5.7
vehicles per platform (Isidore, 2010).

Recommendation for Ford strategy
 I would recommend that Ford need to maintain or continue with its platform
standardization to ensure more benefits of the strategy.
 The company has witnessed growth in production and meeting the vehicle
market that is growing in demand.
 This needs high production that is enhanced through standard car manufacturing
platform that was put in place.
 In addition, under the standard platform strategy car parts can be used to
produce different cars cutting the cost while increasing the production output
(Neal & Terlep, 2010).

Sharing building platforms to standardize
operations
 I think car manufacturers should share building platform but with panted technologies.
 Car manufacturers should share car building platforms as this will help increase the output
while reducing cost.
 Secretive technologies and invented technologies that are linked to the specific manufacturer
can remain patented to reduce the risk of counterfeits in the automotive industries (Vlasic,
2011).
 This will also enable companies with secrets to sell technologies to other companies to
increase the transfer of knowledge from one company to another.
 Intellectual property right and trademark laws can be used to control possible counterfeit or
duplication of technology without prior knowledge of the owner.

Standardized platform
 Ford can become competitive since the company will be the
standard platform where a non-car person such as Jim Hackett needs
to learn general business knowledge to manage the company.
 Under standard building platform car manufacturers will hire any
person that can manage the business and has leadership skills to lead
car manufacturing company and realize profit (Aaron, 2017).

Personal reflection
 I think the standardization of car manufacturing platform requires mutual
agreement between various industry player to ensure that all companies benefit
from the trade.
 Competition has been intensive with companies increasing innovativeness and
inventing their own technologies.
 This can also be licensed to other companies within the automotive industry
under mutual agreement.
 I think this will ensure that young companies have fair ground to compete with
well-established companies such as Volkswagen.

Reference
 Aaron, S. (May 22, 2017). NewFord CEO’s Resume Include Furniture and Football, CNN Money.
 Bomey, N. (April 18, 2012). GM regains 50% stake in its largest Chinese partnership. The Detroit Free Press.Retrieved from
http://www.freep.com/article/20120418/BUSINESS0101/120418050/GM-China-partner-Shanghai-automotive-deal
 Brady, D. (May 2, 2014). How Ford Helped Mark Fields Win, Bloomberg BusinessWeek.
 Burden, M. (January 5, 2017). GM Sells Record 3.87 Million Vehicle in China, The Detroit News
 Dee-Ann, D. & Krisher, T. (January 8, 2014). Mullaly puts the focus back on Ford's cars, trucks. ap.org. Retrieved from http://bigstory.ap.org/article/mulally-puts-focus-back-fords-cars-trucks-0
 Isidore, C. (June 2, 2010). GM, Ford sales gains outpace Toyota. CNNMoney.com. retrieved from http://money.cnn.com/2010/06/02/news/companies/auto_sales/index.htm
 Kwong, P. (January 12, 2017). China 2016 Car Sales Surge at Fastest Rate in Three Years, China Business
 Krisher, T. (January 10, 2017). General Motors Exudes Optimism, Raises Outlook For 2017, US News and World Report.
 Martinez, M. (January 13, 2013). Ford to Decrease Global Platform to 8, Detroit News
 Naughton, K. (April 29, 2013). GM’s China Bet Mimic Toyota’s Bet on US Last Century, Bloomberg.com
 Neal, E. B. & Terlep, S. (June 14, 2010). Auto-Sales Optimism Fades. The Wall Street Journal. Retrieved from https://www.wsj.com/articles/SB10001424052748704067504575304951455734906
 Treffis, T. (January 9, 2017). Here’s How Ford can Benefit from Bringing Alexato its Cars, Forbes
 Vlasic, B. (June 7, 2011). Ford Strategy Will Call for Stepping Up Expansion, Especially in Asia, The New York Times