In this case, GM took the strategy called “shotgun” that implements a high information technology and had spent a lot of money on information technology, but it was not centralized and standardized to reach every department and employee of the company. In other words, the information system was not linked together and standardized, which kept information from the employeesso they were unable to make efficient and effective decisions.
One of the symptoms that GM faced in the process of producing a product was that the employee was not educated with the system, which led them to make the same mistakes over and over. Also, the design engineer was not aware of the manufacturing environment, so they could not design a product properly to fit to the automated robot assembly system and reduce the work force to make product more efficiently and reduce the cost.
Chrysler took the strategy call “rifle” approach, which saved the company from bankruptcy. Chrysler did not have the funds to implement the high technology through out the entire company, but they invested funds in high technology, which was where they were needed most, and created a fast return.
It is clear that Chrysler’s strategy is different than GM: Chrysler’s information system is linked and centralized so it is utilized well by employees and other stakeholders such as suppliers. Due to this effort, Chrysler had improved in productivity and efficiency, but quality and productivity was not enough to compete with oversea competitors like Japanese automakers.
Also Chrysler merged with Daimler Benz which is a German high-end automobile maker. Daimler Chrysler is now facing the challenge of combining two different cultures to use the information system to benefit both companies.
Justification for Problem Definition
GM is the biggest auto maker in the industry and has five different, separate operating groups and divisions (Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac). This created a heavy bureaucratic culture, top-down structure and a closed system within each individual division.
This makes it hard to use a centralized and standardized information system for the whole company. Due to this problem, each division can’t share the information in order to manufacture a large percentage of parts by themselves to make the automobiles, and they compete with each other rather than cooperating and helping each other to achieve the parent company’s (GM) goals. As a result, GM is losing the market share battle to oversea competitors and other domestic automobile makers.
Chrysler has been successful in innovating the company to meet the high technology needs to survive in the competition, but they have not reached the levels of quality and productivity they need. Chrysler adopted an information system to support its inventory system and improve efficiency. The system has an improved inventory turnover and the efficiency of the manufacturing process, but Chrysler didn’t pay enough attention to the quality control of the automobile they produce.
When Chrysler merged with Daimler Benz to form DaimlerChrysler, which should have given Chrysler an opportunity to improve their quality, but it created another problem. They now have to bring two different cultures together to work right and create benefits for both companies.
Alternatives and Evaluations
– Keep the current arrangements: Though the current arrangement is not working smoothly, it is working in some areas. Perhaps by continuing to take things slowly, the organizations will come together more effectively.
– Enter a strategic alliance with successful automobile makers: This alternative is different than merging. By using this alternative, GM can work with a company that has a highly successful information system and learn from them. In this case, GM won’t have to worry about bringing two different cultures together like Chrysler does. On the other hand, GM has to give up something to its partner company to learn something from them.
– Create a cross-functional team between Chrysler and Daimler Benz:
Cross-functional teams made of individuals from two different departments or functional specialties will improve efficiency and productivity at the same time. Two company employees will work together on the same team to build a project they have been given from the company. One advantage of cross-functional team is they can reduce miscommunication and maximize the information advantage for both companies.
– Merge with an Asian automobile company: Chrysler should merge with a Japanese automobile company to create a multinational automobile company. The benefit of this alternative is that all three companies will have easy access to entering each other’s market. Also, Chrysler can learn productivity and efficiency from Japanese automobile company and quality from Daimler Benz. One disadvantage is that Chrysler will have to face cultural differences with two other companies.