General Motor new weekly - Case Study Example

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In order to realize the goals of an organization, the managers must undertake a thorough assessment and analysis of the operational environments of a business, both internal and external environment,…
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General Electric: Major Appliance Business Group Introduction Effective management is a crucial component for the success of an organization. In order to realize the goals of an organization, the managers must undertake a thorough assessment and analysis of the operational environments of a business, both internal and external environment, to understand the advantages and the shortfalls a business faces. Proper management is categorically significant in larger cooperation trading on several lines of production under the same title since ineffectiveness of a single product of such organizations can influence the worth of other products. Learning the operational environments of a business, including the weaknesses, strengths, threats and opportunities would enable investments into the sectors of production that are likely to help in the realization of business goals (Teece, 2010).
In an attempt to understand the implication of proper management and challenges facing the operations of a large business cooperation, this paper is purposed to conduct analysis of a case study of the general electrics (G.E), which is part of the Major Appliance Business Group (MABG), a company specializing in household electronic implements. The analysis will focus on understanding the reasons for the success or failure of the business in relation to decisions undertaken by the management of the company.
Case study
According to the case study, in 1970’s, MABG was a lead US kitchen appliance manufacturer specializing in products such as microwave ovens, refrigerators, ranges, home laundry appliances as well as dishwashers. The operations of the company were thus segregated into three major lines; applied research and engineering, manufacturing and marketing with a fourth smaller division of product management being a component of the three lines. In 1979, the company’s board of directors authorized an investment of $28 million in a project code-named Project C, a project initiated for the manufacture of dishwashers of materials with higher value that their predecessor. This was meant to improve the brands of the company as well as improve the company’s employment rate (Wheelwright, 1992).
Despite the market shares exceeding 20%, the company’s management viewed its dishwasher business as a setback. The research conducted by the company indicated its dishwasher brands were just a medium quality owing to the material (steel coated with soft vinyl known as plastisol). Plastisol was susceptible to scratches thus exposing the steal. This led to higher incidences of rusting of the dishwashers in comparison to those of its competitors that were made of ceramics. Additionally, the dishwashers were criticized for noise as well as high consumption of water, prompting the company to commission its team of researchers to devise better materials for the improvement of the product of the company.
The department of research and engineering identified a glass filled polypropylene composite material that was named Perma tuff, and begun introducing the compound to its dishwashers. Due to the low cost of the Perma tuff, the management anticipated an increase in the share value of the products with maintenance of the design of the earlier products and giving a ten-year warranty for the customers to caution against the failure of the product (Wheelwright, 1992).
Despite the average performance of the MABG’s dishwashers, the decision by the management of the company to research on the best alternative material in replacement of the vulnerable ones helped in the maintenance of the business’ competitive advantage. Through analysis of the case study, it is evident that the company benefited from the initiation of project C where the new dishwashers had higher quality, lower production cost, simplicity and maintenance of the design thus helps in the maintenance of the existence customers and attraction of new customers (Simon, 2009).
Despite the projected significances of the new materials for the manufacture of the dishwashers, the project came with a problem of convincing the customers that the Perma tuff was better than the former materials used in the manufacture of the products. Additionally, the staking of the entire $28 million into the dishwashers line was a high risk for a business that traded on different lines. However, with proper analysis of the market and giving assurance of a 10-year warranty on the dishwashers, the management made a viable decision to stake the investment on the dishwashers, as it would lead to improvement of the company’s reputation.
The success of the project C resulted in an increase in demand for the product thus necessitating an increase in production. An increment in production demands an increase in labor force, thus to ensure job security for the labor force; the company agreed to a collaboration with labor organizations. This thus leads to the development of employee motivation, which improved performance and productivity. The decision of the management of the company to change the material for the manufacture of its dishwashers was thus an advantageous one that helped in the realization of the objectives of the company (Trkman, 2010).
Simon, H. A. (2009). Rational decision making in business organizations. The American Economic Review, 64, 493–514.
Teece, D. J. (2010). Business models, business strategy and innovation. Long Range Planning, 43, 172–194.
Trkman, P. (2010). The critical success factors of business process management. International Journal of Information Management, 30, 125–134.
Wheelwright, Steven C. "General Electric: Major Appliance Business Group (Abridged)." Harvard Business School Case 693-067, December 1992. (Revised November 1993.) Read More
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