Mgt 3830 - Gm Case, Honda Articles

Lacy Jarreau

MGT 3830

                        GM Case, Honda Articles

INTRODUCTION:

        The case on General Motors, and the collection of articles that talks about the Honda Effect are very interesting pieces of work. The GM case is draws heavily on the readings we have been assigned to read from the textbook written by Rothaermel. However, the collection of articles on the Honda Effect do not draw from the text written by Rotheramel, they actually bring in more information on how the case on GM came to be. It broadens my understanding about the GM case, which talks about General Motors from the beginning. I will explain the case on General Motors, and show how the articles about the Honda effect extend my understanding of strategy, and corporate advantage.

THE BEGINNING

        In the article about Decisions made by Executives of GM, it states that Billy Durant created the first automobile conglomerate, along with the automobile industry’s first ever vertically integrated company. This was acquired through a series of mergers and acquisitions. In the articles about the Honda Effect, they mention that Honda followed a policy of developing the market region by region. It also shows that Honda’s success in creating demand for lightweight motorcycles was extremely phenomenal, which broadens my understanding of the GM case where it states that the integration of the company was brought about my mergers and acquisitions. If Honda was developing with this phenomenal success then, why can’t GM do the same thing? Maybe GM can even learn from Honda and follow some of the same strategic policies.  The reading from chapter 1 in the text by Rotheramel gave me wonderful insight while reading the GM case, because most of it was about management, and the strategies the used to build dynamic company’s around the world. So the articles that spoke about the Honda Effect did extend my knowledge about strategy, and the way that GM could very well build their company.

UNDERSTANDING OF COMPETITIVE ADVANTAGE

        In the GM case I read about the two strategies that Sloan came up with. One was the “pricing pyramid”, which showed the pricing variations of the different brand of cars, from Chevrolet, to Cadillac. This idea of the pyramid was made so that customers would shift purchasing vehicles as their economic and money situations changes. In other worlds Sloan wanted to distinguish General Motors from its competitors and to have a car for every type of person, and purpose, whether it be to go to work or ride for pleasure. This strategy alone kept a very strong competitive advantage over GM’s competitors around the world. It also kept customers satisfied, because no matter what they could afford there was a car for them. The second strategy I read about was the focus on research and innovation. Sloan made it a priority to be always changing and improving with his vehicles. He also wanted to always improve his “luxury” car.  From the test by Rotheramel I see that Sloan kept up with competitive advantage by using the VRIO framework. He had valuable cars, somewhere rare and most were costly to imitate, and his strategies were very organized. An example of different cars, but better car for your money would be the Ford vs. Chevy, although both very cheap cars, the Chevy was better, because it had more luxurious aspects that the Ford did not have, and that is how Sloan kept his advantage. In the articles about the Honda Effect they have articles that table about the formulation of their advantage. It talks about how Honda embodies a rare combination of inventive ability and ultimate self-confidence. It also talked about how Honda redefined the U.S motorcycle industry.  This article also had a “ring of truth” it gave examples of how Honda was able to strategize to find market power, and to keep their competitive advantage they has with their motorcycle. It gave us a real-life example of how a company overcoming obstacles was able to become more successful than the rest. Which brings me back to the GM case, and how Sloan did these same things. So again the articles about the Honda Effect expanded my knowledge not only about the strategy’s Sloan used, but also ways to keep competitive advantage. They like Sloan kept their advantage in Japan with their high-power/low-weight BIG BIKE. The articles told us of ways Honda kept up with the times, and made different changes to their bikes to keep the “bikers” happy.