HI6008 Business Research: Case Study Analysis of General Motors
Case Study: General Motors: Packard Electric Division David
Schramm, the chief engineer for Cable and Component Design (CCD), glanced at the RIM grommet in his hand and considered the risks and benefits. Packard Electric had developed the RIM (Reaction Injection Molded) grommet as a new technology for passing the wires from the engine compartment through the fire wall to the passenger compartment of passenger automobiles. The Product, Process, and Reliability (PPR) committee, which had the final responsibility for the new product development process, had asked Schramm for his analysis and recommendation as to whether Packard Electric should commit to the RIM grommet for a 1992 model year car. It was already March 1, 1990 and, because of the lead time on the equipment and tooling, the decision had to be made within the week (see Exhibit 1 for the project schedule). While many of the product development people were very excited by the RIM grommet’s possibilities, many of the manufacturing people were dead set against it.
Packard Electric Background
The Packard brothers founded the Packard Company in the late 19th century to produce carbon fil ament lamps and transformers. In 1899, the company moved into the fledgling automobile industry and began to produce automobiles. Eventually the automobile business was sold, but Packard continued to be a supplier of ignition systems. General Motors bought the Packard Company in 1932, and it became the Packard Electric Division of GM.
The management of the Packard Electric division had remained fairly autonomous through the years. In the first 90 years of its existence, Packard had only seven general managers. Although the ma jority of its sales were to GM divisions, it did receive significant business from other automobile companies.
During the 1980s, GM experienced significant competition—particularly from Japanese imports. GM’s share of the U.S. market had dropped from 45% in 1980 to about 34% in 1989. Despite its parent company’s problems, Packard Electric’s revenues and profitability grew steadily in the 1980s at a rate of 8-9% per year. This growth was attributed to two factors: increasing sales to other automobile manufac turers, and the growing electronic content of automobiles. By 1989, Packard had over $2 billion in sales, of which 25% was to non-GM customers.
Task:
In regards to the General Motors case, even after a full case analysis, where lies the greatest areas of uncertainty? What can be done to mitigate these areas of uncertainty?
Answer:
The greatest uncertainty that is present for General Motors is their RIM technology which has faced several backlashes in its functioning and performance. The major issue is that the customers want the technology but do not understand the extent to which the technology can give them assistance. If the technology was made available in the market then the company would have to face many issues regarding the performance, however, the solution of those issues would take a great deal of time and money on the part of the company (De Almeida, Ferreira & Baoming, 2013). The easier option was that the IHG grommet could be used by the 1992 models, but Schramm had no intention of giving up on the technology since he recognised the several potentials it had. The greatest uncertainty in this fact is that the technology might not be a success without the proper changes that needs to be done.
These uncertainties could be eradicated either by developing the technology in the proper way by investing the desired time and money that it requires but it could not be made sure that the development will be positive (Szyma?ska-Bra?kowska, M., & Malinowska, 2017). However, the best decision of the company and Schramm would be to give up on the technology as wasting time on it would just take the company backwards and not give it a chance to grow. Therefore, it is more profitable if the company adopts the IHG technology and incur profits from its success rather than suffering loss because of the RIM grommet.
References:
De Almeida, A. T., Ferreira, F. J., & Baoming, G. (2013, April). Beyond induction motors—Technology trends to move up efficiency. In Industrial & Commercial Power Systems Technical Conf (I&CPS), 2013 IEEE/IAS 49th (pp. 1-13). IEEE.
Szyma?ska-Bra?kowska, M., & Malinowska, E. (2017). The improvement of the company’s environmental performance through the application of Green Lean/Lean and Green approach.
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