Characterize the alliance between GM and SAIC Shanghai Sample Assignment
1. How would you characterize the alliance between GM and SAIC Shanghai?
The mutual relationship between SAIC and GM is aimed at dominating and controlling the car market in China. The two companies teamed up to produce full range of vehicle models and designs for the local industry and pave the way for the Asian market at large (Ahrens, 2013). GM aimed at tapping the potential market in Chinese about cars and SAIC aimed at accessing the technology GM had to diversify her production. Though the two companies have had the difference, they still cling to each other to enable them sustain themselves in the market.
2. What has driven the GM alliance in Shanghai?
GM aimed at tapping the Chinese vehicle market and Asian market at a later (Ahrens, 2013). The low cost of production in China enticed GM into investing in the country. SAIC being a domestic company had already established market share that GM wanted to share and design new products as well as modifying the existing ones to dominate the automobile industry in China. SAIC, on the other hand, wanted to access the technology of GM and incorporate it into their production (Ahrens, 2013). The team up would allow many young SAIC engineers have full access to latest GM designs and models in the United States and bring it home. GM was establishing a research unit and SAIC wanted a share in the operations of GM to expand their businesses.
3. How is the VRIO framework established within the GM alliance in Shanghai?
According to (Jurevicius, 2013), the VRIO framework is the evaluation of competitive potential of an internal resource based on value, rarity, imitability and organisation.
Value -The pooling of diverse technological and design skills by the two companies have enabled them have and upper hand in maintaining the market share, especially in China.
Rarity - Through their research units like Pan Asia Technical Automotive Centre (PATAC) the two companies have come up with unique products some even made for the government that are protected by intellectual property rights and the proceeds from them reserved to be enjoyed by the two companies (Chunli lee, 2003). Imitability - Their designs and products are protected and patented by intellectual property rights therefore it is illegal to duplicate them. The secrets of their trademarks and technology are closely guarded business secrets thus making it very hard for imitation. Organisation - They have organised their operations to exploit their advantageous resources for full utility. They incorporate the value, the rareness of the resources, their inimitable qualities to give them what is best for their competitive advantage.
4. How can GM combat opportunism that may occur from being in the China market?
GM can put the opportunities available to them by being in the China market to diversify the products and expand operations to produce enough goods for the local market and for export (Chunli lee, 2003). Conditions are favourable in China to expand and produce cars on a large scale and so they should aim not only the local market, but also the regional market if not global.
4. What will determine successful performance from alliance?
The GM vision in China is to be the best automotive group with its partners in China (General Motors China). A successful performance for the partnerships will be based on the observation of contractual terms they entered the partnership. The contractual terms will need to be respected and observed to prevent possible termination of the partnership prematurely. Their success will also be determined by their innovation and creativity to meet the changing consumer needs locally and globally. They also ought to open more branches in the country and venture into other countries as a partnership to fill the market gaps existing companies would have left a void. They can still diversify their products and make more auto motives like motorbike and that will assure them of long term service delivery to its customers.
Ahrens, N. (2013). China's Competitiveness: Myth, Reality and Lessons for United States and Japan. Washington DC: Centre For Strategic And International Studies. https://www.csis.org/programs/japan-chair/japan-chair-archives/chinas-competitiveness-myths-realities-and-lessons-united
Chunli lee, T. F. (2003). The Chinese Automobile Industry and the Strategic Alliances of China, Japan and US's Firms. Retrieved from http://ltodi.est.ips.pt/PCunha/PDF%C2%B4s/ProdInteg/Strategy%20Chinese%20autoIndustry.pdf
General Motors China. (n.d.). Media. Retrieved may 22, 2013, from http://media.gm.com/media/cn/en/gm/news.detail.html/content/Pages/news/cn/en/2013/Jul/Milestones.html
Jurevicius, O. (2013, October 21). tools/vrio.html. Retrieved May 22, 2015, from https://www.strategicmanagementinsight.com/tools/vrio.html