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GM Design Change April 2, 2007

Posted by Brian Mulligan in Auto's, Growth, Manufacturing, transportation.

Design is the biggest part of car making. The design either turns a customer off or excites the customer to buy the car. Originally, GM thought that American design would sell well in both the US and internationally, but they were very wrong. They soon employed design teams in each country.

To combat the needs of international drivers, GM has established 11 design team scattered across the world. The most success for GM has actually been in China. Behind the work of Joe Qiu, the head designer for the highest selling Buick in China, the LaCrosse. He worked with his team in China, totalling 100 people with only one non-Chinese worker from Canada. This is a testament to the changes that GM has gone through.

In the past, GM believed that whatever came out of Detroit was the right thing for selling their cars in both US and abroad. The China office had a paltry 23 people, all American, in their office only six years ago. Now the office is all Chinese, whom are in touch with the needs and wants of the Chinese.

In a effort to promote creativity, GM actually pit all of the 11 offices of design against each other to create the best design for their cars. This created incentive for the designers and pushed them to find new ways to design cars and make them appeal to the public.

“But the executives also understood that they could no longer depend solely on Detroit talent. To compete with the best products, and to serve a global market, they would have to tap creativity in new places and in new ways. Welburn and Lutz decided that competition–the bare-knuckled, no-holds-barred sort–would expose the best ideas, wherever they came from.”

The CEO Ed Welburn decided to place the Chinese office against the North American office for the design of the Buick LaCrosse. The two teams came up with drastically different ideas for the car. In the end, Welburn combined both of their designs to create a car that had an interior inspired by Qiu and an exterior designed by the North American office. The car sold like wildfire in China, only second to the sales in the US as told in the article in Fast Company Magazine, “Made in China.”

Looking forward, the company has made sweeping changes with their design idea and how their company manages their creativity and design.

Do you think each country’s office should design the whole car for each region? Do you feel that this is cost effective? Do you think that GM should stick with this setup or not?


Allstate March 28, 2007

Posted by Stephanie in advertising, Auto's, Government.

While flipping through Business Week for an article to grab my attention I became frustrated and tired.  Closing the magazine and tossing it next to me I noticed the words on the back.  “The #1 killer of teenagers doesn’t have a trigger.  It has a steering wheel.”   A personified car and several paragraphs of information followed.  Who was responsible for this information? The back cover was actually an advertisement for Allstate.

With their motto “It’s time to make the world a better place to drive,” the company forcefully focuses on informing drivers about vehicle safety and how to avoid dangerous situations. 

Their newest campaign is directed towards teenagers, as their lives are greatly impacted by motor safety, even if they think they are invincible.  The advertisement states, “[motor vehicle crashes] take nearly 6,000 [teenage] lives and injure another 300,000 every year.”  Their new safe-driving program, “Keep the Drive” empowers teens with information and the ability to influence others by making smart decisions.  Allstate hopes that teens will recognize and enforce “smart driving is the key to keeping their licenses, their cars, their friends and their futures.”

This advertisement, filled with information triggered more thoughts about motor safety.  Why was this company spending so much time, energy and money to look after the well being of so many people? Is it their job to do so?  After all, they are not the ones even making the cars. I was curious to see what role the government plays in creating and maintaining safety regulations. 

On the U.S. Department of Transportation website I learned that since 1967, standards have been established for all manufacturers of motor vehicle and equipment items.  Constant changes and amendments are made to the regulations.  The Federal Motor Vehicle Safety Standards and Regulations are minimum requirements written  “that the public is protected against unreasonable risk of crashes occurring as a result of the design, construction, or performance of motor vehicles and is also protected against unreasonable risk of death or injury in the event crashes do occur.”

The standards fall under three categories, Crash Avoidance, Crash Worthiness and Post Crash Standards.  Of the short overview I read, the standards at least seem to be adequate, but with such high numbers of motor vehicle deaths, are they doing enough?  Should there be stricter regulations, say on the placement of bumpers, since a bumper on an SUV is certainly not going to help the safety of persons in a sports coup if they collide. Heck, seat belts and air bags certainly weren’t originally in cars, but many lives have been saved because of new regulations.   

 What is your feeling about car safety?  Should it be left up to the government, manufactures, and insurance companies or are the present standards and regulations good enough?

A Saab’s Story March 27, 2007

Posted by Kira in Auto's, brand, Consumers, Marketing, Organizational Environment, outsourcing, Retail.

Saab was faced with the challenge of expanding its market to mid-size sports wagon drivers in the U.K. To accomplish this, Saab had to overcome two major disadvantages. Not only was their marketing budget smaller than their competitors but, their brand recognition and reputation was smaller as well. To promote the 9-3 SportWagon, Saab created a two-part campaign that combined direct mail and the internet. The campaign was a game called “The Race Against Time.” This campaign included a 100-page “choose your own adventure” book that was mailed to people who inquired about the car. The book put its readers in a Saab 9-3 and dared them to see if they could reach a weekend destination without falling into trouble. The story moved forward by choosing from optional actions listed on each page which all led to a different set of circumstances. The game was also offered online- so people could sign up for the game and for additional information about Saab. By playing online, the players could e-mail their results to a friend and challenge them to beat their time. Participants could also record their personal progress. As an incentive, participants who won the challenges were eligible to win a Saab 9-3 Aero V6 SportWagon and Saab-branded sports merchandise. Although Saab officials assumed that no more than 5,000 people would participate in the campaign, more than 29,000 people signed up to play online with 40% also signing up to receive electronic news updates from Saab. The game was also placed on other websites and on blogs (go figure!). Sales for the 9-3 rose in Great Britain from 2,000 cars sold in 2005 to more than 6,000 in 2006.

“We got a set of people who never would have considered Saab,” says Ed Birth, the Saab account manager for Draftfcb (Draftfcb created the campaign)

Saab’s campaign is an example of a recent trend in which marketers are targeting consumers enticing them to play games and activities in order to get them to spend more time with the brands. The longer the time spent with the product the more likely the brand will come to mind when making a future purchase.

Last class we were discussing survival strategies. I would say that Saab is a k-specialist- they had to break into an established market for sport wagons. Some of the reasons that Saab was probably successful as a k-specialist were because they already knew that a market for sport wagons in the U.K. existed and that games and activities were a marketing success. They were able to see trends in the existing companies in the sport wagon market that they could “mimic” and allowed them to see the correct way they could compete.

By using direct mail, online websites, and blogs, Saab was able to reach different potential consumers. The use of online websites allowed Saab to capture younger consumers while also capturing the names and e-mail addresses of potential consumers who registered. This could allow Saab to generate a database for future marketing tactics. Also, the game was a great way to tap into consumers’ emotions- I know it made me reminisce about the “Choose Your Own Adventure” book that I had when I was younger!


I think the game can still be played online- check it out for yourself!

Hate Static on the Radio? March 25, 2007

Posted by K.C. in Auto's, Manufacturing, media, Technology.

Radio broadcasters and audio tuner companies are finally using digital Radio, a new type of radio technology. The technology is called HD radio, not an abbreviation for High Definition, was developed by iBiquity Digital Corporation and was introduced about three years ago. Compared to analog radio, which is currently broadcast, this new radio technology will supposedly produce much better sound quality without any static interference.

In its first introduction, the high cost of implementing the new technology deterred radio stations and audio component manufacturers from introducing the technology to consumers but because of a recent drop in costs have began to adopt it. When HD radio was introduced, broadcasters were hesitant to adopt the technology because of the high cost consumers would have to pay for the new HD head units (car stereo). However, prices have dropped and companies now offer HD head units for around $200 and installation is comparable with satellite radio conversions.

Aside from the quality of sound from HD radio, what is interesting is the fact that no subscription is needed to receive HD stations and most large radio stations offer or will soon offer HD radio broadcasts. Furthermore, HD radio broadcasters can also offer several different broadcasts on the same frequency. This will therefore allow radio stations to target several niches of listeners and give their audiences a choice of several different broadcasts. However, thus far only BMW has announced they will offer HD radio tuner options in their cars.  

Do people see this as a viable alterative to satellite radio? Can HD compete with Sirius/XM radio?   

I lost my car keys! Nissan’s New Marketing Campaign March 20, 2007

Posted by K.C. in advertising, Auto's, Internet, media.

           Recently, Nissan North America began a campaign to promote its next generation car technology, particularly the new push-button ignition system that will soon be available on most of its cars. Nissan is attempting to use a different style of advertising that will target only a specific niche of consumers. Unlike previous Nissan advertising, their campaign will not be mass marketed on traditional media outlets. Instead, Nissan will be loosing car keys at clubs, bars, and concerts in hopes of targeting a more “in” young crowd. The keys will be on a key chain that include actual metal car keys, a card that says,

“If found, please do not return,” because the Altima “has Intelligent Key with push-button ignition, and I no longer need these”  

      The key chain also includes a short paragraph about the Nissan Altima, and a gas card that can be redeemed online for entrance into a sweepstakes and $15 worth of gas. Nissan used the True Agency who use guerilla style marketing and have been used for previous Nissan advertising campaigns. While the keys are fake, Nissan hopes to target consumers who are less influenced by traditional marketing campaigns and attract traffic to its newly updated website.


        This type of guerilla marketing is more prevalent in large cities where advertising space both, on the street and on TV and the internet is scarce. Personally, I think guerilla type marketing is very powerful and if I were to find a set of these keys, I would visit Nissan’s web site.     

If I had the Money I would Buy Chrysler March 6, 2007

Posted by K.C. in Auto's, brand, Manufacturing, Merger.

Recently at the Geneva Motor Show, DaimlerChrysler chief executive, Dieter Zetsche discussed speculations about dumping Chrysler. While he did not give too many details, he did discus how if Daimler were to sell Chrysler, they would sell the company as whole and not break up its brands. Chrysler has a highly integrated production system that allows it to manufacture different brands of automobiles using similar platforms and parts. Therefore, if Daimler were to sell Chrysler, they would not sell its brands individually as many Chrysler badge cars use the same chassis as Jeep and Dodge vehicles.

Chrysler Group is very integrated,” – Dieter Zetsche

In addition, many new Chrysler vehicles use Mercedes parts and pieces, which may create a problem for the brand if Daimler does decide to sell them. The Chrysler Crossfire uses almost 70% of its parts from Mercedes vehicles and if Daimler were to drop them, Chrysler would need to find another manufacturing source.

In the past few years, DaimlerChrysler has tried to differentiate the Chrysler brands and focus on establishing its three brands as unique brands. Ford on the other hand is facing issues with brand differentiation because many of its Ford badge models look almost identical to its Mercury and
Lincoln brand models. In my opinion, I think Chrysler remains an attractive automotive unit because they have been able to produce cars that have appealed more than many other American brands. Even with a loss of $1.5 billion last year, Chrysler has been able to increase its global sales 15 percent outside of North America this past year.


Industry analysts argue that private equity investors would be the most likely buyer of the brand and if this does occur, Chrysler may be forced to drastically reduce its operations.

The Big-Car Problem February 28, 2007

Posted by breichen in Auto's, Consumers.

Germany is a country known for producing some of the finest automobiles in the world, regarding both performance and luxury. Top German automotive brands include Audi, Mercedes-Benz, BMW, and Porsche. Problems may be on the horizon for these automakers however. Earlier this month, the European Commission proposed a new set of emissions standards. This announcement resulted in a great deal of uproar, especially from the German chancellor, Angela Merkel. The emissions ceiling was raised to 130 grams of CO2 per kilometer, which would have to be met by these automakers by 2012.

What is problematic about this change in emissions standards is that the organizations responsible for producing these fine German Automobiles have a lot of work to do. Within in the European Union there are only six car models made by German organizations that meet the new target, but 34 models made by competitors in other European countries already do meet the standards.

The automobile industry is Germany’s biggest, employing 1 out of 7 members of the manufacturing workforce. Germany is also a country that prides itself on the attention paid to environmental affairs, leaving the country in a bit of a bind. It is speculated that German carmakers should benefit by “spreading their escalating research and development costs across a greater volume of vehicles,” although German attempts to delve into the mass market have been relatively unsuccessful as DaimlerChrysler is facing collapse and the takeover of Land Rover by BMW had horrendous results.

Don’t fear, the German car market does not seem to be suffering yet. Volkswagen recently announced a 52% increase in operating profits for the 2006 fiscal year, not too shabby. German cars undoubtedly dominate the performance parts of the luxury market, although it is clear that buyer’s tastes are evolving, especially with aspects of cars that affect the environment. This can by seen in the American market with a decline in the SUV market, which can be attributed to Chrysler’s decline.

[Audi,Porsche, BMW and Mercedes Benz thrive in a domestic market where almost one out of every three cars sold is a premium model. This compares with little more than one in ten cars sold in America.

It will be interesting to see how the luxury German automakers react to these requirements in the near future, and the effects that they will have on the Brands and organizations themselves.

Toyota: Soon to become the World’s largest automaker? February 28, 2007

Posted by Bertan in Auto's, Consumers, Manufacturing.

Toyota Motor announced yesterday that due to increasing consumer demand, they will be building their 8th North American Assembly plant. The factory will cost approximately $380M and it will be located in Mississippi since it is a relatively low-cost state.

Toyota motor, trailing only GM in the U.S. in the car industry plans to produce 150,000 Highlander Sport vehicles per year, a big favorite in many states. Due to increased demand and incredible growth of 13% in the last annual report, GM is starting to get worried and many government executives are talking about a US political backlash over imports.

The past couple of years have been very successful for Toyota. For example, they overtook DaimlerChrysler in 2006 and Toyota sales included 1.18 million vehichles.. Many competitors fear that Toyota Motor will become the world’s largest automaker this year. Investors, realising the growth, have bought many shares over the past year raising the market share by 2.1 points.

Toyota Motor makes safe, reliant cars and lately they have also focused more on efficiency and design, creating great cars which attract the attention of many people. Which goes to show why they sold 663,948 vehicles just this January…

For Anyone Who Lives or has Driven in New York City February 27, 2007

Posted by K.C. in Auto's, Technology, transportation.

This article will probably only be exciting for people who either live in a big city with a vehicle or who travel to big cities by car. For the first time ever, Manhattan will have enough parking spots for everyone. Ok this is untrue but they will have New York City’s first automated parking garage. AutoMotion Parking Systems, the American subsidiary of Stolzer Parkhaus of
Strassburg, Germany has developed a parking system that is almost entirely robotic and computer controlled. Imagine a PEZ dispenser except with cars instead of candy. Instead of parking lots being old shady looking abandoned lots with cars parked horizontally, this new type of parking system parks cars vertically inside a building, without the need of reckless valets or parking attendants. The system is completely automatic and needs no human inputs to park the cars. 

“The driver locks the car, takes the keys and picks up an electronic card from a nearby machine. A large door closes behind the car; motion detectors ensure that no children or pets are left behind. Then the pallet holding the car slides below ground level, into two subterranean floors of storage. ‘It’s simple — park, swipe and leave,’”

Living in the city is already tough enough and having a car makes it even more difficult. It makes New Yorkers pretty mad to come home on a Sunday night to find that every last parking spot on the entire Island has been taken. Aside from the obvious convenience benefits, the parking system is energy efficient and may actually pollute less than traditional man powered parking systems.  

Ethics in Business January 31, 2007

Posted by wilson7 in Auto's, Consumers, transportation.
1 comment so far

In chapter two of our book it deals a lot with Ethics, this topic related to the Ford Pinto case that I read in Business Government & Society. In 1970, the Ford officials had to confront a difficult decision either delay production of the new Ford Pinto or continue as scheduled. The problem with the Pinto was the design of the gas tank, which failed 8 out of 11test trails (the 3 that passed the test all had modifications to the gas tank). The company decided to do a cost-benefit analysis to determine if it was worth the wait. This analysis determined that a person killed in a gas tank accident was worth $200,000, a person injured was worth $67,000, and vehicles burned $700. How is a company able to put a price on a human life? Is this fair to the families of these people? Anyway, Officials estimated that there would be 180 burned deaths, 180 burned injuries, and 2,100 burned vehicles thus totaling $49.5 million. On the other hand to fix the gas tank it would cost $11 per car and truck, there were 11 million cars and 1.5 million trucks totaling 137.5 million. The Ford officials decided to continue as schedule in the belief that the delay of the new automobile would cost the company more money than the lives that they put in danger. How do you think this situation worked out? 

Aristotle said that deciding what is the best ethical course is not easy. Reasonable people will disagree on what is right. The ultimate, overreaching questions are: What is an ethical company and to what extent should law require ethics? 

Did the Officials for Ford make the right ethical decision? I do not believe so; they put a car with defects on the road knowing that people would be seriously injured maybe even killed. They decided that making money was more important than human life. How many companies do you think are like this around the world? Is there 1, 100’s, 1000’s? A consumer would never know, only the members of that organization. Should there be laws that prevent this type of unethical behavior? I do not think this can be regulated by the government but only in the minds and hearts of the producer. Officials have to determine what is more important a quick buck or the death of several innocent people. Between 1971 and 1978 there were 700-2,500 deaths with fires involving the Ford Pinto and 100’s of millions of dollars in lawsuits. So was it worth it?