Chevrolet Motor Company Operations in Qatar - Case Study Example

PROJECT MANAGEMENT: CHEVROLET MOTOR COMPANY-QATAR DIVISION Student’s Name Course Title Name of Instructor University Affiliation State Date Project Management: Chevrolet Motor Company-Qatar Division In the recent years, business organizations have recognized the importance of embracing an effective project management in their operations. Project management plays a significant impact on contemporary business organizations since it enables the company to achieve viable projects that can enhance their local and global performance (Kerzner 2013). Through efficient management of various projects within an organization, the business can attain its goals and objectives. This is because the project management results in the adoption of important processes that are focused towards achieving both short-term and long-term business operations. This paper examines the Chevrolet Motor Company operations in Qatar and the strategies that the multinational company adopted to implement the project of establishing a subsidiary in Qatar. Goals and Objectives of the Project Goals of The Project The primary aim of setting up a division or branch in Qatar was to expand the operations in the global market. Chevrolet Motor Company recognized the presence of stiff competition by other automobile manufacturers such as Ford Motor Company and Toyota Motor Company. Chevrolet Company, a division of General Motors, therefore, decided to embark on a project of establishing a subsidiary in Qatar in with the aim of expanding its operations. Objectives of the project The objectives of the project include: a) To expand operations in the Middle East Countries through the establishment of a subsidiary company in Qatar- Chevrolet Motor Company decided to venture into the global market by selecting Qatar, a Middle East country, as a region of initiating the project of opening a subsidiary. b) To establish a global distributor of the company's vehicles-Just like other multinationals, Chevrolet Company wanted to attain global operations so as to achieve a share of the world market. c) To increase revenues of the company through the establishment of a subsidiary automotive firm in Qatar-The desire to increase profits and income enabled Chevrolet Motor Company to initiate a project of establishing a subsidiary firm in Qatar. Description of the Project Chevrolet Motor Company is a division of the General Motors that manufacturers Chevrolet brand of General Motors vehicles. Due to an increase in operations and good performance in the local market, Chevrolet Motor Company decided to begin a project of establishing a subsidiary automotive company in the Qatar in 2007. The company first started with evaluating a global company that was experiencing a weak demand for vehicles from multinational corporations such as Ford Motor Company and General Motors (Fetzer 2008). After a thorough evaluation and market research, Chevrolet Motor Company found a suitable market in Qatar, one of the Middle East countries. Qatar was chosen as the best country to establish a subsidiary company due to favorable trade policies and a high demand for vehicles manufactured by global firms. The company, therefore, undertook a partnership deal with Jaidah Automotive Company that was selected as the sole distributor of Chevrolet brand of vehicles. Chevrolet Motor Company, therefore, started a separate division of known as Chevrolet Special Vehicles in Qatar. The special division was to sell vehicle such as cars, trucks sourced from General Motors division in South Korea. Moreover, other vehicles were also to be sourced from the parent company’s subsidiaries in Australia and the United States of America. Company Description and Types of Services According to Knudsen (1997), Chevrolet Motor Company is a multinational corporation that operates as a division of the General Motors Company. The Chevrolet Special Vehicles division in Qatar was established as a way of expanding the operations of Chevrolet Motor Company. The subsidiary company after the formation was expected to produce and sell high-performance vehicles sourced from various Chevrolet company's subsidiaries in different parts of the global market. The primary goal of establishing the Qatar subsidiary company was to have an international distributor of Chevrolet motor vehicles in the world market. Jaidah Automotive Company, therefore, created four large showrooms where Chevrolet brand of cars are showcased and sold. The showrooms are located in the following areas: Jaidah Square Jaidah Square is the largest showroom and distributor of Chevrolet vehicle brands in Qatar. The showroom sells car brands such as Chevrolet Sedan, Malibu, and Cruze. Jaidah Square has a sufficient showroom area where potential clients can check the different vehicle brands and select a brand and model that satisfies their personal taste and preference. The square is located in the central business district within Qatar. The presence of favorable trade policies such as affordable import taxes has led to an increase in the sales of Chevrolet vehicles in Jaidah Square. Salwa Road Another sub-division of Chevrolet Motor Company is located on Salwa road. The showroom also has a high capacity for the Chevrolet brand of General Motors vehicles. Due to its proximity to the major highways in Qatar, the division has also experienced sales in the recent years. The store also sells different brands and models such as Chevrolet Sonic, Malibu, and Sedan among many others. Salwa Road store has attracted customers due to the adoption of effective communication by the company agents. The Qatar Division has recognized the importance of creating an enabling environment for the customers. The company, therefore, has improved the relationship with its clients. Jaidah Flyover Store This is also another showroom that Chevrolet Motor Company established with the collaboration with Jaidah Automotive Company. The store contains several high-performance vehicle brands such as Chevrolet Cruze and Sedan. The designing of the warehouse and good customer relationship has resulted in high demand for the Chevrolet brand of cars. The store is tailored towards the needs and preferences of the consumers. The customers can check the various vehicle brands, test-drive and select another brand without any inconvenience. Moreover, the company agents in Qatar have improved the relationship with the customers through effective communication. The agents of the company offer customer-oriented services in which they use effective communication strategy as a way of attracting the clients. Al-Khor Store This store is strategically located in Qatar. The central location is aimed at increasing the demand for the Chevrolet vehicle brands in the country. Since Qatar is a Middle East country, it adheres to Islam religion. The company, therefore, has managed to receive a high demand from the local customers since the store is designed according to the Islamic cultural norms. The workers in the store are expected to behave according to the rules and expectations of Islamic religion and culture. Moreover, there are sections in the warehouse that are reserved for praying. In such areas, the local customers can go for praying in case the prayer times find them while in the store. The customization of the company's services has attracted the local consumers due to its excellent reputation and public image. The store also sells hybrid vehicles with a longer durability. Organizational Structure at Chevrolet Qatar Subsidiary Company During the preparation stage of the project, Chevrolet Motor Company recognized the importance of adopting a viable organization structure. Effective organizational structure plays a fundamental role in the management and the operations of the organization (Rugman & Collinson 2004). The organizational structure at Chevrolet division in Qatar uses a hierarchical system in which the parent company makes the overall division that is then used by the subsidiaries and divisions in different parts of the world especially in Qatar. The organizational structure includes: General Motors At the top of the organization chart is the management of General Motors Company. General Motors is the parent company of Chevrolet Motor Company. The parent company, therefore, makes crucial decisions that affect the operations of all the divisions and subsidiaries that are located in different parts of the globe. Although Chevrolet Motor Company operates separately, it still uses the decisions made by the parent company since it is a division of General Motors. Chevrolet Motor Company At the second phase in the organizational structure is the management of Chevrolet Motor Company in the United States. The company is the parent company of Chevrolet Special Vehicles in Qatar. Therefore, the parent company makes decisions as well as adopts policies that have a tremendous impact on the operations of the Qatar division (Dessler 2009). For example, the managers at Chevrolet Motor Company came up with a project to start a division of the Company in Qatar. The parent company, therefore, makes most of the policies and decisions that influence the operations of the Qatar subsidiary. The organizational structure is composed of the chief executive officer, the middle-level managers who manage various departments and the junior employees. Chevrolet Special Vehicles in Qatar-Jaidah Automotive Company The final step in the organizational structure is the management of Chevrolet Qatar division. The management of Jaidah Automotive Company is responsible for managing the four stores in Qatar. The stores such as Salwa Road store have a manager and other employees. The manager reports to the general director of the Qatar division who in turn reports to the general manager of Chevrolet Motor Company in the United States. The senior vice-president of Chevrolet Motor Company currently is Alan Batey. Types of problems experienced in Chevrolet Qatar Subsidiary Company. Since the adoption of the Chevrolet Qatar subsidiary, the project has experienced some challenges such as: Stiff Competition The major problems that have been encountered in the implementation of Chevrolet Qatar division are stiff competition from other multinational companies. Global vehicle manufacturers such as Ford Motor Company and Toyota Corporation provide stiff competition in Qatar. These companies have acquired a significant share of the automotive market in Qatar. Due to the production of high-quality vehicle brands, multinational car manufacturers such as Ford Motor Company have affected the demand for Chevrolet vehicle brands in the country. Although Chevrolet Qatar division has tried to reduce the level of competition through the production of low-cost car brands, the presence of other market players has brought an adverse effect on the company. Lack of Sufficient Skilled Labor The labor-force in Qatar lacks relevant skills that can be used to enhance the operations of Chevrolet Motor Company in Qatar. Skilled labor plays a crucial role in promoting the operations of an organization both in the local and in the global market. For example, the country lacks skilled labor that can be used to support the activities of the company in the Middle East country. Chevrolet Motor Company, therefore, has been forced to outsource skilled labor that has brought a negative impact on the operations of the company. Through outsourcing of skilled labor, the financial resources that the firm has generated have been used to pay the skilled labor from other countries. Poor Management Management issues have also faced Chevrolet Motor Company Qatar subsidiary. Due to the complex organizational structure, it has become very challenging to implement the decisions and policies from the various managers in the organization. Due to the presence of different opinions concerning necessary organizational operations, the project has not progressed smoothly since its adoption (Burke 2013). For example, some top managers at Chevrolet Motor Company in the United States believe that the choice of Qatar as the country for initiating the project was not aligned with the goals and objectives of the parent company. A section of the managers believes that the company should have chosen a highly populated country instead of Qatar. However, several managers agreed that the selection of Qatar was viable since Chevrolet Motor Company wanted to achieve global operations. Some managers have also embezzled the financial resources of the company leading to a poor performance of the enterprise. The lack of effective leadership styles such as transformative leadership has also derailed the operations of the subsidiary in Qatar. A section of managers in the company believes that the employees should not be allowed to interact with the managers. The adoption of a vertical communication has hindered the relationship between the senior managers and junior employees in the organization. Unfavorable Trade Policies The establishment of Chevrolet Motor Company branch in Qatar has also been faced with unfavorable trade policies such as high taxes on import goods. Most of the Chevrolet vehicles are produced in other countries such as the United States and distributed in Qatar (Larson and Gray 2011). The vehicles, therefore, are considered as import products. Qatar has adopted policies that are aimed at encouraging the development of local industries. This has included increasing taxes on import products from other countries. The measure has hindered the operations of Chevrolet subsidiary in Qatar. Analysis of the Causes of Delays/ Problems in the Project Several underlying reasons have delayed effective implementation of the Chevrolet Motor Company subsidiary in Qatar: Problems in the Preparation Stage of The Project The preparation phase plays a crucial role in any project that a business has implemented. Failure to adopt goal-oriented preparation can hinder the adoption of the particular project. Chevrolet Motor Company failed to undertake a proper performance analysis of the project before embarking on implementing the project. For example, the company neglected to develop an appropriate organization structure that was supposed to spearhead the subsidiary company in Qatar. Instead of adopting an independent leadership structure for the branch in Qatar, Chevrolet Motor Company decided to use the leadership structure of the parent company. Presence of Low Demand of Chevrolet Brand of Vehicles Another underlying problem that has affected the operations of the business is a small demand for Chevrolet vehicles. Qatar is a relatively small country compared to other countries such as Australia. The presence of a low population also influences the need for the vehicles. This is because the number of individuals who can purchase the vehicles is smaller as compared to countries with high population. Therefore the choice of Qatar as the primary distributor of Chevrolet vehicles in the Middle East was affected by the population of the country that resulted in low demand for the motor vehicles. Low Socio-Economic Standards in Qatar The economy of Qatar has experienced a recession due to a high level of poverty. A greater percentage of the citizens lack sustainable jobs due to unequal distribution of economic resources. A larger percentage of the vital financial resources are in possession of the upper class and the ruling class. The working class and the lower class are therefore unable to generate sufficient income (Pierce and Delbecq 2004). Therefore the general socio-economic standard in Qatar has brought a significant impact on the operations of Chevrolet in the country. Moreover, illiteracy level is high in Qatar hence leading to a reduction in the number of people who can purchase and use the Chevrolet brand of vehicles. This is because the high-performance vehicles usually experience a high demand among the educated and upper-class members of the society. Implications of Project Management Tools and Techniques in the Project Project management tools can shape the direction that a project undertakes. The tools that are adopted plays a critical role in the project management process. The implications of the project management tools and techniques in Chevrolet Company subsidiary in Qatar include: Project Quality Control This project management tool has brought a tremendous impact on the operations of modern business organizations. The quality or viability of a project is fundamental to the success of the whole project. For example, in the Chevrolet subsidiary company in Qatar, the suitability of the project should be measured and evaluated. The personnel responsible for implementing the project should ensure that it can result in the achievement of the set goals and objectives. The quality of the project will only measure after undertaking an evaluation of the effectiveness of the project. One area that Chevrolet can examine to check the project's effectiveness is the feedback from the consumers. The clients who have purchased and used Chevrolet brand of vehicles can provide critical information about the quality and viability of the project. Change Management Change management has also brought a great impact on the operations of Chevrolet subsidiary firm in Qatar. The adoption of change management is one of the most important events that the company undertook. The first aspect of change management that the business took was to adopt new policies that created an enabling environment for setting up a subsidiary firm in the Middle East country. Global operations require the adoption of new policies that can align with the internal trade policies of the particular country. For example, Chevrolet Motor Company has adopted trade policies that ensure that they only import a specific amount of vehicles into Qatar market. This policy is meant to boost the activities of the local automotive companies through preventing monopoly in the market. Another policy that was changed is the pricing of the Chevrolet vehicles. The company adopted a price range that was focused on the customers in Qatar. Since Qatar is a developing country, the company chose a relatively lower price as compared to other markets such as Australia of Canada. The company realized that through regulating the prices of its vehicles, it could compete favorably with other multinational automotive companies such as Toyota and Ford Motor Company. Another aspect of change occurred in the utilization of resources. Through saving the cost of transport, warehousing and distribution of the products to the customers, the company was able to reduce the production costs as well as expenses thus leading to an improvement in the operations through the generation of a lot of revenues and profits. Project Performance Measurement Chevrolet Motor Company recognized the importance of undertaking a performance measurement as a project management tool in the new market. According to Simon (1995), performance measurement plays a crucial role in the overall performance of a project since it can result in the identification of the viability of the project in the market. The first step that the company undertook was to evaluate the performance of the project through analyzing the immediate impact of the subsidiary in Qatar. After the establishment of Chevrolet branch in Qatar, there was a reported increase in demand for the Chevrolet brand of cars. This was because the people were excited about the new company and wanted to test the quality of its high-performance vehicles. The company, therefore, used the feedback given by the customers to evaluate the performance of the market. The customers believed that Chevrolet brand of cars was sustainable and efficient. However, despite the positive feedback from the consumers, there was stiff competition from other Motor vehicle manufacturers such as Ford and Toyota Corporation. The presence of a stiff competition was resulting in reduced sales in the various Chevrolet stores in Qatar. The company also undertook a market research to identify the main reasons for efficient performance by other vehicle manufacturing companies. Chevrolet Motor Company realized that other automotive producers were selling the cars are relatively lower prices. Moreover, the firms had adopted customer-oriented strategies that are aimed at retaining the clients. Through active channel of distribution, the customers could buy the vehicles from the stores and the company delivered the vehicle to the customer's residence. Effective Communication Plan The project also adopted a viable communication plan that was aimed at improving the relationship between the new company and the customers. The first step that the corporation undertook was to train the employees on effective communication. Since the company was operating in a new market with a new culture, the employees were expected to learn the language and culture of the Muslims. This measure was supposed to ensure effective interaction and socialization between the company agents and the local Muslim clients. The company agents, therefore, were expected to learn both Arabic and English. Moreover, the public relations personnel were also expected to grasp knowledge about the culture of the Muslims in the country. Acquiring knowledge about the culture of the local people enabled the employees in the Qatar division to follow the cultural expectations of Islam when interacting with the customers. Moreover, Chevrolet Motor Company adopted advanced telecommunication technologies to enhance communication between the organization and the customers. The company created a website in collaboration with Jaidah Automotive Industry. The website provides valuable information concerning the brands of vehicles that the new company sells. The website also has an interactive forum where the customers can interact with the company agents and inquire about critical information in the organization. Chevrolet Motor Company subsidiary in Qatar also holds monthly shows and exhibition in which the various Chevrolet vehicle brands are showcased in public. Another critical aspect of communication that the subsidiary firm has undertaken is the effective dissemination of information to the consumers. The company uses press releases and emails to inform the public about the launching of the new products as well as the pricing of the available vehicle brands. Through effective communication, the company has managed to penetrate the local market. How the Project Manager Adopted Planning, Scheduling, and Budgeting Process for the Project Planning Stage The project manager undertook a comprehensive planning and preparation for the project of establishing a subsidiary firm in Qatar. The project manager first conducted a market research in the Middle East country. Different countries in the region such as Saudi Arabia were evaluated for their viability in handling the project. However, the project manager realized that Qatar was the best option due to the presence of favorable trade policies and a shortage of a distributor of high-performance vehicles. The next step was to gather significant technological, financial and labor resources that were to be used to implement the project. The company then selected Jaidah Automotive Industry as the company's partner that was going to assist in the distribution of the Chevrolet vehicle brands in the local market. Proper planning led to the effective implementation of the project in Qatar. Scheduling and Budgeting Process The next crucial step that Chevrolet Motor Company undertook was to schedule and budget for the project. The project was to be implemented in three phases with each step taking at least six months. During the first stage in 2007, the company started promoting the vehicle brands in Qatar. The company also created awareness on the planned establishment of the Chevrolet subsidiary firm in Qatar. This measure ensured that the citizens of Qatar became aware of the proposed project implementation in the country. The next phase was to build the stores in the selected areas. The third stage was to start sourcing the vehicles from the company's production centers in the United States. The total budget for the Chevrolet Qatar subsidiary company establishment project was $2,000,000, and it was used in the three important stages. The budgeting and scheduling process led to an efficient implementation of the project. 1st Phase ($) 2nd Phase ($) 3rd Phase ($) Total Creation of Awareness/Promotion 100,000 50,000 20,000 170,000 Building of Stores in Qatar 1,000,000 600,000 50,000 1,650,000 Sourcing of vehicles and distribution in Qatar 90,000 40,000 30,000 160,000 Total 1,190,000 710,000 100,000 2,000,000 a) Proposed Budget and scheduling process for the project Resource Allocation, Monitoring, Control and Evaluation Techniques of the Project Investigating the Resource Allocation The project manager should examine how the resource allocation process was undertaken in the project. The usage of the financial, technological and labor resources should be reviewed to determine if they were used effectively. Moreover, the project manager should investigate if the resource allocation for the project is in line with the goals and objectives of the project. Investigating the Monitoring and Controlling Techniques The project manager should also examine how the project can be monitored and controlled by the parent company. As a subsidiary firm, it requires close monitoring and control by Chevrolet Motor Company to ensure that the operations can generate revenue and profits for the organization. The project manager should, therefore, investigate the critical aspects of project monitoring and control. Investigating Evaluation Techniques The project manager should also study the evaluation techniques that the company will adopt in evaluating the performance of the project. For example, the company can assess the reactions of the customers as well as the impact of the business on the economy of Qatar. Evaluation will play a great role in determining the viability of the project. Business Solution, Analysis, Costing, and Breakdown. The implementation of the project will result in the establishment of Chevrolet Motor Company subsidiary in Qatar. The adoption of the quality control tool has enhanced the operations of the subsidiary company in Qatar. Through the quality control tools, the company has managed to measure the quality of the project as well as the impact on the economy of Qatar (Veloso 2006). Chevrolet Motor Company developed a plan that could result in efficient use of resources in the new subsidiary. The company ensured the use of cost-saving means of production and marketing of the vehicles in the market. Chevrolet Vehicle Brand Cost per Unit($) Sedan 400,000 Cruze 310,000 Malibu 350,000 Sonic 250,000 a) Proposed Cost breakdown for brands in Qatar Findings and Conclusion Through effective implementation of the project, Chevrolet Motor Company will be in a position to establish a viable subsidiary firm in Qatar. The planning, budgeting and allocation process can result in proper utilization of the available resources aimed at implementing the project. Moreover, through the adoption of achievable goals and objectives, the various stages of the project can be completed in time thus leading to the establishment of the subsidiary company in Qatar. The company should also undertake a market research to test the viability of the market in Qatar. The project should be delivered in three phases each taking six months. The management of Chevrolet Company in Qatar should realize that for the company to penetrate the new market, it is supposed to adopt consumer-oriented strategies. The budget of the project should be $2million. The company, therefore, should tailor their services to the taste and preferences of the customers in the local market so as to provide high-quality services in the new market. Reference List Burke, R, 2013, Project management: planning and control techniques, New Jersey, USA. Dessler, G, 2009. 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Veloso, F, 2006, ‘The automotive supply chain organization: global trends and perspectives’, Massachusetts Institute of Technology Working Paper Read More