Jose Ignacio Lopez de Arriortua Case Essay

1696 Words Feb 22nd, 2008 7 Pages
Jose Ignacio Lopez de Arriortua Case

General Motors is one of the world's most dominant automakers from 1931. After 1980s economic recession the main goal for automobile companies was cost reduction. Customers became more price-sensitive. Also Japanese competitors came into market with the new effective system of production. So market was highly competitive and directed toward price reduction. The case states that in 1991 GM suffered $ 4.5 billion losses and most part of the costs of manufacturing was due to purchased components. GM NA hired Lopez in order to find the way from "extraordinary" situation and reduce costs. Answers to the case questions: 1. Andrew Cox states in his article that the ideal situation for buyers is
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Ford, Chrysler and GM used completely different techniques and did not value so much this type of collaboration. Their main goal was to get parts as cheaper as possible and not carrying about relationships. That's why Toyota and Honda grew very fast in the market and reached competitive advantage in pricing, reputation and supply chain management.
As for the barriers I think they already exist. They are reputation of American companies, low prices for Japanese cars, structure of supply chain itself, knowledge base they possess and rules they established. For American companies to change their current system will require huge investment in terms of restructuring the business, employing best practices and hiring best people as well as improve the reputation they have with suppliers. To reach the same level of pricing and reduce costs require long-term work with vendors. Discipline and knowledge base should be developed which also takes much time and efforts to do it. But Japanese companies still can hold these barriers high by continuously applying same techniques and developing new more efficient. Such tight collaboration and satisfaction throughout the supply chain will lead only to improvement of their competitive position in the market and won't let other companies to copy those methods.

3. A key point of the case is when and how power should be used in the
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