case study

Topics: Automotive industry, Shanghai Automotive Industry Corporation, General Motors Pages: 135 (24594 words) Published: October 2, 2013
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INTEGRATIVE CASES

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n this chapter, the objective is to discuss cases that draw on the frameworks and perspectives developed throughout the casebook and that include important issues from each of the earlier chapters.

GM IN CHINA
For GM China, the year 2004 brought a wide variety of new challenges that added to an already complex business environment. The industry structure was changing quickly. Demand and supply projections for motor vehicles had promised substantial increases in sales and profits, but suddenly the optimism faded. China’s new membership in the World Trade Organization (WTO) created expectations of “a level playing field” for foreign investors, but—at least in the short run—major barriers remained. Government intervention persisted, particularly the requirement of a joint venture partner, competition from government-owned assembly firms, and arbitrary rules such as sector-specific credit restrictions. Violation of intellectual property, with the copying of foreign automobile designs and the false branding of parts, was an ongoing threat. Meanwhile, inflation was increasing, and the government was unsure whether and how to use monetary and fiscal policies. Of great importance, the government had purposely kept the renminbi undervalued for many years. Pressures were building for the government to change its foreign exchange rate policy, but a higher renminbi would suddenly decrease GM China’s international competitiveness.

INTEL’S SITE SELECTION DECISION IN LATIN AMERICA
Intel decided to locate its next assembly and testing plant in Latin America. Four countries had made the short list: Brazil, Chile, Mexico, and Costa Rica. Ted Telford, International Site Selection Analyst for Intel, needed to recommend a final site. There were two key issues that had to be resolved first: (a) What kind of business environment was most 561

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CASES IN THE ENVIRONMENT OF BUSINESS

suitable to Intel’s needs, and (b) how could Intel leverage its bargaining advantages most effectively? The case illustrates the advantages for a high-technology company such as Intel, with its strong need to operate in a country with stable, predictable rules of business and to invest in a fully consolidated democracy.

THE ACER GROUP’S CHINA MANUFACTURING DECISION
The Acer Group is one of the world’s largest PC and computer component manufacturers. The vice president of Global Operations was pondering whether the timing and environment was conducive for Acer, based in Taiwan, to commence full-scale manufacturing operations in the Chinese mainland. Students are asked to examine the criteria on which Acer should base its decision to manufacture overseas and, in so doing, create the framework for a corporation’s global manufacturing strategy. The teaching objectives also include having students consider the political, economic, and societal environments of a global manufacturing strategy.

GM IN CHINA1
Prepared by Danielle Cadieux under the
supervision of Professor David Conklin
Copyright © 2004, Ivey Management Services

We have an enviable position in the world’s
fastest-growing automotive market, China, where
investments in the mid- and late 1990s have paid
dividends far larger and sooner than anyone predicted. Our unit sales in that market increased 46 per cent last year, and we increased our market share.2
A leap over the cliff: are the big profits to be made
in China blinding foreign carmakers to the risks
ahead? A flood of investment is causing concern that
the industry will soon be vulnerable to overcapacity.
There are also longer term doubts about the rules by
which Beijing expects manufacturers to play.3

CHALLENGES IN CHINA
Founded in 1908, GM was the world’s largest
vehicle manufacturer, with 15 per cent of the global

Version: (A) 2004–12–09

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