GM + China = The New Largest Car Manufacturer?

As technology advances, new cars continue to be introduced. Within the car industry, the multiple manufacturers make it a highly competitive market. Some of these manufacturers include: Ford, Honda, Nissan, Hyundai, Toyota, Volkswagen, General Motors, and many more. Each manufacturer has their personal strengths and weakness as well as targeting various segments of customers. As competition continues to increase, these manufacturers need to develop new strategies in order to obtain a larger share of the market. General Motor’s take on this new strategy is by increasing their capacity in China.

General Motor’s expansion in China will be a three year process. Within these three years, GM plans to open four additional plants, which will also create “approximately 6,000 new manufacturing jobs” (GM). With this expansion, GM and their joint ventures in China continue to increase in quality and quantity. Bob Socia, the president of GM China, stated that ““GM is a car company, but we are also a people company. You can’t build great vehicles without great talent.” GM and their joint ventures currently have 55,000 employees in China, and this number will continue to rise. By expanding in China, GM is able to find local talent “with a focus on design, engineering, R&D, manufacturing, purchasing, and sales and marketing” (GM). This emphasizes GM’s attempt to retain global talent along with learning to improve their operations with the help of China. By locating facilities globally, GM is able to provide better goods and services for their consumers as well as improving their supply chain.

Along with the increase in plants and employees, this partnership with China has pushed General Motors in a new direction. Over the next five years, GM plans to focus on SUV’s and luxury models. Bob Socia believes that

 this new focus along with the expansion in China will result in a positive reaction from consumers. Socia stated that “We expect Cadillac sales to go from 30,000 last year to 100,000 in 2015” (WSJ). Although this may seem very ambitious, the new global strategy of General Motors may end in a positive result. Along with the increase in sales, GM also plans on introducing 17 new and upgraded models in China.

This expansion allows GM to improve on their manufacturing capability through the new plants, employees, and other opportunities within China with their joint ventures. Although these articles don’t include all the parts of the strategic process, they emphasize on GM’s operations process for their new strategy. However, with GM being such a large car manufacturer globally, it’ safe to assume that the other parts of the strategic process which include marketing and finance/accounting are being handled properly as well.

Currently, according to “Spot On Lists”, General Motors is ranked second in the list of the top 10 biggest car manufacturers in the world. The Volkswagen Group is number one on the list. Will GM’s expansion in China allow them to overtake Volkswagen as the largest car manufacturer in the world? Is GM’s new strategy going to result as highly as they forecast? Although the details of their strategy may seem strong on paper, will this plan be executed correctly?




Getting Better with Age?


While on a trip to Willamette Valley Vineyards in France, I tasted a wine that was aged for ten years, and I found that aged wines have a unique taste than newly produce wine. However, while consuming the wine, my mind started wondering how the end- to -end process flow works, what are the critical process controls, what are the priorities of operation managers, and finally how to manage the inventory.

First, I would like to share how the process flow works. Below is the end-to-end diagram that explains that process.

Many steps need to be completed in order to have an aged bottle of wine. My mind was wondering about all the steps because what I had recently learned in the class about network diagrams. For example, the vineyard, crusher, fermentation, and aging need to be completed first in order to have bottling and packaging operation. To find the critical path analysis, it is important to know how long it will take to complete each activity. In addition, it depends about the variety of grape, what kind of wine we need to produce and how long it needs to be aged before the final activity occurs. For example, with most Merlots, it could be aged between 2-12 years.

There are important critical process controls in the operational flow for achieving high quality of wine. Factors, such as crap quality, sorting, fermentation, aging, and filtration process all quality of wine. All these processes are controlled carefully as any deviation can lower the quality of the final product.

In addition, critical areas to focus on the superior customer response time or service are distributor, retail, and tasting rooms as direct sale. These were chosen because wine industries can receive instant feedback from the customers in order to provide exceptional customer service. By getting the customer feedback, wine businesses will be able to respond and react fast enough to correct or solve the issue. Also implementing an information system to streamline and automate data flow for business processes will improve performance and gain access to real time data.

Operation Management is another integral role in the process. Close attention to the areas of labor, equipment, raw material, and inventory must be paid to insure the success of the production operations. Focus on achieving the highest efficiency in production operation is very critical to wineries because of the highly competitive nature of the industry. Inventory control system is another area that requires a lot of attention because a huge stock of inventory needs to be held for aging. The quality of these inventories need to be closely monitored and highly managed in order to generate desired revenue and profit.

What kind of inventory method wineries are using? Is it worth paying more money for aged wine? Is wine getting better with age?


How To Save J.C. Penney: Shut Hundreds Of Stores, Say Business Professors


J.C. Penney has been a popular shopping mall back to the time, however, currently J.C. Penney appear problems to face.J.C. Penney hired Ron Johnson as J.C. Penney CEO in June 2011, and Johnson started a new strategy of Pricing method for J.C. Penney such as “Every Day” Price and ” Best Price”. However, those methods do not help company sale profit increase. Although J.C. Penney stock has been risen, total sale of 2012 decrease a lot after Ron Johnson took over CEO position. In Fact, Johnson gave wrong strategy for J.C. Penney.

Therefore, J.C. Penney fired CEO Ron Johnson and solved problems itself. J.C. Penney have been operated for more than 100 years. In the article, Bruce Clark, a professor of marketing stated that some J.C. Penney are old, and it had not opened more new stores in the last five years. J.C Penney located from suburb to downtown, it has been experienced peak or trough. Nowadays, there are more competitors than old modernization, such as Macy’s, Sears and Nordstrom; these stores are mostly located in downtown and mid-range areas. J.C. Penney has financial problems because they did not do well in operation management. To have a good operation management, it need a great critical thinking.

In addition, in the end of article, it mentioned that the main focus of J.C. Penney for now is to open stores in higher end malls. I think that it has this idea, this main focus because it can attract more higher-income customers to shop J.C. Penney so that it can earn more sales. Also, if J.C. Penney are going to put stores in higher end malls, they have to have great critical decision to save stores. Since it will be closing 700 stores out of 1100 J.C. Penney stores, it need to offer great design of goods and services, managing quality and supply chain management. In Chapter 1, we discuss in-class of ten critical decisions, and I think these three decision areas are more concern for J.C. Penney. Since they have a bad strategy of pricing and cash drain before, it need these decisions to operate well J.C. Penney.

If J.C. Penney really decide closing stores, I believe that it is a tough decision since it is a large company with 1100 stores and open more than 100 years, and it would cause a lot of effects, such as it will make handles all closing stores problems, a lot of employee and employers losing job opportunities, destructing of  operating covenants  and paying penalty. Therefore, if J.C. Penney do not close that 700 stores and have new strategy development, I think that J.C. Penney can be back on track, for example, like the Chapter 2 strategy, the elements of operation management strategy are low-cost products, high-value offerings and efficient, flexible operations adaptable to consumers etc.  Therefore, I think that it should not close stores, and I believe that each of J.C Penney stores still have value so they should not give up, and they just need a great strategy and critical decisions of management.



Forecast Schmore-cast: Is Forecasting pointless in today’s economy?


World leader and the largest in the advertising and marketing corporation, WPP, has decided to cut its full year growth outlook forecast after the discovery that clients have cut on spending for advertising due to the economic crisis.

WPP has has looked into expanding into more international markets. Currently making more than two third sales in Latin America the Middle East, Central and Eastern Europe and Asia Pacific, WPP’s goal is to increase sales by forecasting for the next three and four years. However, their forecasting hasn’t been 100% accurate recently after showing that the markets in Brazil have slowed by 1.9% in their third quarter from 3.6%, sales in North America have dropped .4% and a 2.1% decline in Europe (Bender). In August, WPP ended up changing their forecasts of high expectations to lower growth expectations that advertising needs from clients would decrease, which ended up decrease particularly in the health care, call center and public affairs market. Even in their most popular time of client expectancy was at an all time low in September.

I believe that there have been many challenges for many companies to forecast the growth rates in the market with the current economic crisis which has set many companies back. Large companies such as Fannie Mae, GMC, Bank of America and many more major corporations primarily in the financial sector have had the greatest impact.

The question is, if forecasting isn’t providing a beneficial outlook for the future of a business, what else can businesses do to try to predict their future outlook within the market place? With the economies aggregate behavior of employment, output, and prices shifting since 2008, is cutting off the full year growth outlook such as WPP has decided to do, the best option?

Don’t Cry Over Spilled Soup!

As cold and flu season is fast approaching, it would be fair to assume that soup consumption will rise, not so says the largest soup maker, Campbell’s who has experienced declining consumption of its canned soups. According to research overall canned soup, consumption is down 13 percent and more individuals prefer fresh soups offered at supermarkets and restaurants. In a recent article Campbell’s announced it is will be closing two of their plants to cut cost, which will result in cutting more than 700 jobs. Campbell’s largest and highest production costing plant in California will be the closing in July of 2013 and their spice plant in New Jersey will be transferred to the company’s other spice plant in Milwaukee in March 2013.


In order to maintain competitive advantage over their competitors Campbell’s has decided to freshen up their image to lure younger consumers by introducing new soup flavors and sauces, such as, coconut curry with chicken & shiitake mushrooms and tomato roasted garlic bacon bisque and change from the iconic steel can design to offering their new products in pouches. In addition, Campbell’s has taken notice of the growing culture of consumers who seek healthier and fresher foods; thus, Campbell’s has embarked upon the fresh packaged food category by recently purchasing Bolthouse Farms for 1.55 billion dollars. Clearly, Campbell’s operations management strategy is geared towards low cost production, minimizing cost by eliminating products that are not returning good profits and maintaining competitive advantage over it competitors (supermarkets and restaurants offering fresh soup) with the purchase of fresh packaged food company Bolthouse Farms.

Check Out Campbell’s Article

Campbell’s is the world’s largest soup maker that has 19,900 employees globally. According to the Bureau of Labor Statistics, the unemployment rate for August 2012 was at 8.1% still considerably high. 700+ Campbell’s soup employees will be joining the others in the unemployment line starting as early as March 2013. What is your take on soup giants’ operations management approach?


Chinese Car Dealers Face Unexpected Obstacle

On June 30, 2012 at 9pm, the municipal government in Guangzhou, China declared that new vehicle registrations for the month of July would be suspended, effective at midnight. This decision was made in an effort to limit congestion and pollution problems and to keep the number of new registrations capped at half of the total number for 2011. In a panic, dealerships reopened their doors for the three remaining hours of allowable new vehicle sales. Consumers swarmed the dealerships and hundreds of vehicles for sold.

In most cases, this sudden increase in demand would be a dealership’s dream come true. Unfortunately, these registration restrictions will create massive obstacles for the dealerships. There are nearly 10 and a half million residents in Guangzhou, but effective July 1, restrictions allow for only 120,000 new registrations to be issued in the next year.

Guangzhou is not alone either. Many other major cities in China are also using quotas by way of license plate lotteries and auctions to limit road congestion and air pollution. It is expected that smaller cities will also begin following in the footsteps of their larger counterparts.

In the past year, demand for vehicles had already fallen when compared to the prior year. Dealerships in Guangzhou were already facing inventories that almost doubled in May. Now, with these new regulations, it is fair to assume that those inventories with increase even more, potentially crippling the dealerships.

Though many vehicle manufacturers are making efforts to produce environmentally friendlier vehicles, perhaps the larger problem in these cities is the physical congestion on the roads. Overwhelming populations have put record numbers of vehicles on the roads. There are nearly 2 and a half million vehicles in the city that has only 800,000 parking spaces and the average driving speed in Guangzhou is just 12 miles per hour. These staggering facts have tied the hands of municipal leaders and, in turn, had a massive impact on dealerships.

So, what do you think can be done to help lessen the burden on the dealerships? How should these dealerships try to better manage their inventories during times of stagnant sales?