Description
This presentation is about overview and reasons of the problems associated with General motors and daewoo alliance.
Failed marriage Between General Motors and Daewoo
Overview
? General Motors Today
? General Motors, also known as GM, is the world's
second largest car manufacturer based on annual sales.Founded in 1908, in Flint, Michigan, GM employs approximately 266,000 people around the world. ? In 2008, 8.35 million GM cars and trucks were sold globally under the brands Vauxhall, Daewoo, Buick,Cadillac, Chevrolet, Pontiac, and Opel.
? Daewoo Motors
? The Daewoo Motors was a South Korean car
maker established in 1978, part of the Daewoo Group. ? Very first automobile company in Korea, it was equipped with modern assembly facilities
Case Study Overview
? In June 1984, General Motors
and the Daewoo Group of Korea signed an agreement that called for each to invest $100 million in a South Korean-based 50/50 joint venture for production of Pontiac LeMans
Reasons
? GM to capture a very lucrative market, Korea. ? Daewoo-a global expansion with such a deal, allowing it to export ?
? ? ? ? ? ?
and enter into GM’s established markets. GM could enter without much problem, & compete without facing problems like include costs of plant building, cultural learning, physical GM-achieve a 10% market share in Asia GM could compete with Ford. Daewoo would gain new technology and engineering skills Daewoo could access overseas markets and the growth of concept cars that they develop. GM’s -compete on a larger scale and allow Daewoo to transfer them over to their divisions Cheaper to manufacture cars in Korea
Problems from the beginning
? Culture of both companies was different-Daewoo
was aggressive and General Motors was complacent. ? Daewoo had experience in other industries but lacked technology for producing automobiles ? Conflict of interest – GM wanted learning ground in Asian Markets while Daewoo wanted too much technology and sales support.
Problems continued
? Workers throughout the country demanded better wages ? ?
?
?
?
and wages had to be doubled Poor quality of the cars. German wages were still higher, but German productivity was also much higher, which translated into lower labor costs. Sales plummeted to 37,000 vehicles in 1991, down 86 percent from their 1988 high point. Daewoo executives complained that GM executives were arrogant and treated them shabbily. GM tried to prohibit Daewoo from expanding the market for Daewoo's cars into Eastern Europe.
The Final Nail in the Coffin
? Daewoo asked GM to agree to expand the
manufacturing facilities of the joint venture. ? More $100 million and for Daewoo Motor to double its output. ? GM management refused ? Daewoo bought GM's in November 1992 for $170 million over three years for its 50 percent stake
Analysis and Recommendations
? Venture did not have a common goal.
? Good learning for GM
? Labor quality also needs to be considered along with
?
?
?
?
labor costs Daewoo brand was significantly damaged Daewoo needed to be more conservative in making decisions. It could have taken help of Korean Govt. No more additional risks for Daewoo Motors
10 years later
? Daewoo Motors was taken over by GM in August
1999 ? Daewoo Motors had debts of $80bn. ? GM acquired healthier parts of the business at the bargain price of $2bn.
Thank You
doc_713363879.pptx
This presentation is about overview and reasons of the problems associated with General motors and daewoo alliance.
Failed marriage Between General Motors and Daewoo
Overview
? General Motors Today
? General Motors, also known as GM, is the world's
second largest car manufacturer based on annual sales.Founded in 1908, in Flint, Michigan, GM employs approximately 266,000 people around the world. ? In 2008, 8.35 million GM cars and trucks were sold globally under the brands Vauxhall, Daewoo, Buick,Cadillac, Chevrolet, Pontiac, and Opel.
? Daewoo Motors
? The Daewoo Motors was a South Korean car
maker established in 1978, part of the Daewoo Group. ? Very first automobile company in Korea, it was equipped with modern assembly facilities
Case Study Overview
? In June 1984, General Motors
and the Daewoo Group of Korea signed an agreement that called for each to invest $100 million in a South Korean-based 50/50 joint venture for production of Pontiac LeMans
Reasons
? GM to capture a very lucrative market, Korea. ? Daewoo-a global expansion with such a deal, allowing it to export ?
? ? ? ? ? ?
and enter into GM’s established markets. GM could enter without much problem, & compete without facing problems like include costs of plant building, cultural learning, physical GM-achieve a 10% market share in Asia GM could compete with Ford. Daewoo would gain new technology and engineering skills Daewoo could access overseas markets and the growth of concept cars that they develop. GM’s -compete on a larger scale and allow Daewoo to transfer them over to their divisions Cheaper to manufacture cars in Korea
Problems from the beginning
? Culture of both companies was different-Daewoo
was aggressive and General Motors was complacent. ? Daewoo had experience in other industries but lacked technology for producing automobiles ? Conflict of interest – GM wanted learning ground in Asian Markets while Daewoo wanted too much technology and sales support.
Problems continued
? Workers throughout the country demanded better wages ? ?
?
?
?
and wages had to be doubled Poor quality of the cars. German wages were still higher, but German productivity was also much higher, which translated into lower labor costs. Sales plummeted to 37,000 vehicles in 1991, down 86 percent from their 1988 high point. Daewoo executives complained that GM executives were arrogant and treated them shabbily. GM tried to prohibit Daewoo from expanding the market for Daewoo's cars into Eastern Europe.
The Final Nail in the Coffin
? Daewoo asked GM to agree to expand the
manufacturing facilities of the joint venture. ? More $100 million and for Daewoo Motor to double its output. ? GM management refused ? Daewoo bought GM's in November 1992 for $170 million over three years for its 50 percent stake
Analysis and Recommendations
? Venture did not have a common goal.
? Good learning for GM
? Labor quality also needs to be considered along with
?
?
?
?
labor costs Daewoo brand was significantly damaged Daewoo needed to be more conservative in making decisions. It could have taken help of Korean Govt. No more additional risks for Daewoo Motors
10 years later
? Daewoo Motors was taken over by GM in August
1999 ? Daewoo Motors had debts of $80bn. ? GM acquired healthier parts of the business at the bargain price of $2bn.
Thank You
doc_713363879.pptx