Manufacturing capacity problem. Product strategy begins with a strategic vision that states where a company wants to go, how it will get there, and why it will be successful (McGrath, 2001) Manufacturing problem General motors’ weakness can be seen as they are not fully utilizing their manufacturing plants. Manufacturing plants that are not operating at full capacity is taking tow on the business, especially in high-cost manufacturing countries. . This show that general motors’ isn’t planning about the future of that product and producing overwhelming of product that may contribute to loses in the company.
There is no future planning and a cause loses in the manufacturing sector. Further evidence of the importance of quality is provided in Deming’s famous Fourteen Points, stating that management must “adopt a new quality philosophy” that “create constancy of purpose toward improvement of product and service (Russell, Gregory R, 1998) Poor Product Quality General motors’ product weakness can be seen as product that is a certain point general motors’ has been criticized for launching numerous new models under different brand and at the same time ditching them if they are not proven to be a stellar success , creating huge levels of product churn.
The company takes 34 hours to built a typical GM car, while the others competitor such as Toyota it take 28 hours. The company has only recently focused on harmonizing production, and sharing parts and car platforms . The result of falling sales, GM has closed several plants, which is incurring the wrath of its unions This is a mistake that general motors’ did because they have to spent a certain amount and require substantial investment in the new models cars that has been launch. General motors’ is facing trouble clearing new models that accumulating in an alarmingly rate.
Compare with other developer they frequently update their product with latest technology and revamp their subtle stylistic change. Another mistake that general motors’ made is they launch newer product and put emphasis on that newer models in the market and neglecting other product that is accumulating in a rapid rate. “It is not necessary to change. Survival is not mandatory” (W. Edwards Deming, n. d). Segmentation Segmentation is essentially the identification of subsets of buyers within a market that share similar needs and demonstrate similar buyer behavior.
Segmentation is another problem. Even though they have 10 main automotive brands, they over-relied on American market. They used eight different car brands while in Europe it sells only three brands. To be an international well-known brand, they should have segmented their products internationally not only focusing on particular part. This is why GM could not even make itself into top 100 brand. (Interbrand, 2010). This means GM failed to get high reputation world-wide.
General motor’s focus on churning out large sports utility vechiles(SUV’s) diverting their attention from normal saloon cars. This product yielded higher margin. But the company biggest mistake was they lost sight of developing a solid saloon car range, whereas foreign competitors developed strong reputation in this sector. A downturn in this product when the oil price raises and the product of the SUV drops. Gasoline used to be essentially the same nationwide, but there are many different “flavors” of gas sold now, in some cases for specific counties.
Generally this seems to cause the price of gas to be higher in and around big cities. Of these many uses of oil in industry and commercial transportation, gasoline demand among ordinary consumers may be the least sensitive to price. That is why the relatively invariable demand of motorists cannot possibly account for the wide cyclical variations we observe in crude prices. It’s the other 60 percent of the barrel that matters most, at the margin. ( Alan Reynolds,2005)
Estimate market potential for Amazon in CountryA using Chain Ratio Method and Method of Analogy.
Background: This assignment relates to the following article: Waheeduzzaman, A. N. M. (2008), “Market Potential Estimation in International Markets: A Comparison of Methods,” Journal of Global Marketing. 21 (4), 307-320. Also check PowerPoints under Course Contents.
Assume yourself to be a marketing manager of Amazon. Amazon has decided to enter country CountryA. We have two very similar countries CountryA and CountryB whose data are given below. Amazon and eBay have very similar entry strategy.
Number of households for CountryA = 90 million.
Number of households for CountryB = 70 million.
Percentage of households subscribing to eBay.com in CountryB = 55%
Percentage of households having Internet in CountryA = 85%
Literacy rate in CountryA = 99%
Percentage of households with substantial purchasing power in Country A = 80%
Question 1: Estimate market potential for Amazon in CountryA using Chain Ratio Method and Method of Analogy. Show your work. No work, no points.
Question 2: Comment on the difference in estimation.