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GM Design Change April 2, 2007

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

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?

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Hate Static on the Radio? March 25, 2007

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

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?   

Business Week’s 50 Top Performers March 20, 2007

Posted by Stephanie in Customer Service, Finances, innovation, Internet, Manufacturing, media, pharmaceutical, Public Interest, Retail, Technology, telecommunications.
2 comments

 

Business Week recently announced its yearly 50 Best Performers article in the March 26, 2007 edition of the magazine. When first looking even at the title of the article I was skeptical about how these companies were selected. It seems impossible to compare every company in every sector and rank their performance. I was pleased however to find their criteria for making the selections seems to be as fair as possible.

Financially they use specific criteria and what they look for in companies when making this list. The two principal financial figures Business Week uses in its analysis are average return on capital and sales growth over the past 36 months. They also consider the importance of examining sectors separately, as factors within one particular sector may inflate or deflate the appearance of a company’s performance unfairly.

Specific quotations I highlighted when reading the article regarding what BW determines as strategies for success:

“…rewriting the rules of engagement in their industries.”

“…a deep understanding of customers, a competitive advantage that has enabled them to sell more good and services than rivals.”

“…work hard to anticipate and head off potential problems well before outsiders are even aware of these looming challenges.”

Details about all 50 companies are included in the compilation of roughly 40 pages of discussion. One particular company I had not heard of before, ranked 31 is Stryker. The company manufactures artificial joints, such as knees, shoulders and hips. Part of their success is due to the baby boomer generation who show no signs of slowing down in retirement even as natural aging takes is toll. Anther interesting aspect of the company is its preparation in changing CEO’s. As the current CEO, John Brown is planning on retiring, COO, Stephen MacMillan has had roughly 4 years to shadow and plan the transition. Both the process the company has developed for the transition and the mere fact that the CEO is not being forced out of the company it seems are two incidents not seen as often anymore.

I am still hesitant to agree that companies covering the full spectrum of all organizations and industries can not only be compared but ranked in a hierarchy. Business Week does an excellent job at attempting this challenge but I feel that some subjective factors weigh into the decision, especially between close rankings, say between spot 8 and 9.

 

1 Google

2 Coach

3 Gilead Sciences

4 Nucor

5 Questar

6 Sunoco

7 Verizon Communications

8 Colgate-Palmolive

9 Goldman Sachs Group

10 Paccar

11 Amazon.com

12 Cognizant Technology Solutions

13 Avon Products

14 Varian Medical Systems

15 Bed Bath & Beyond

16 CB Richard Ellis Group

17 Robert Half International

18 Chicago Mercantile Exchange Holdings

19 Adobe Systems

20 EOG Resources

21 Sempra Energy

22 Sherwin-Williams

23 Lehman Brothers Holdings

24 Rockwell Collins

25 IMS Health

26 Allegheny Technologies

27 Oracle

28 Starbucks

29 Moody’s

30 PepsiCo

31 Stryker

32 Best Buy

33 United Parcel Service

34 Apple

35 T. Rowe Price Group

36 Valero Energy

37 Constellation Energy Group

38 TJX

39 Morgan Stanley

40 Paychex

41 Coventry Health Care

42 United States Steel

43 United Technologies

44 Hershey

45 Black & Decker

46 Synovus Financial

47 Linear Technology

48 AT&T

49 XTO Energy

50 PNC Financial Services Group


The future of magazines March 7, 2007

Posted by Charley S in Internet, Manufacturing, media.
6 comments

http://www.businessweek.com/innovate/content/mar2007/id20070307_564812.htm

This article in BusinessWeek describes the trend right now of how printable magazines are moving from print to online content.  The current way that magazines are distributed is extremely wasteful; over 50% of the magazines printed are not read at all and are either trashed or recycled immediately.  In addition, despite the launch of hundreds of new magazines each year the overall consumption of magazines in America remains constant.  New magazines are finding it harder and harder to remain profitable, even though many are extremely innovative and win all sorts of awards.  Many publishing companies are trying to milk the paper magazine while it still lasts by changing from a monthly to a weekly schedule, which quadruples the potential revenue from advertising.  Still, the trend to have all online magazines is unstoppable and eventually you will only be able to view magazines online.  To establish themselves to take advantage of this new trend, publishers will have to gain a new set of core competencies like internet website designers and graphic artists.  Publishers will have to combine these new people with the traditional magazine workers to make sure that they are profitable in the future.

Another topic that is touched on in this article is the issue of smaller magazines that may only have as few as 1,000 subscribers.  The author of this article contends that these smaller magazines will still remain in print because the people that read these types of magazines are very interested and committed to the magazine.  I desagree with the author because I think that costs will increase too much for small magazines to remain printed.  As the big publishers move to new online distribution methods, the old printers of magazines will either go out of business or will be forced to increase prices to remain in business.  Therefore, small magazines will not have the same number of printers to use  because in affect the large publishers were subsidizing the smaller magazines. 

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

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

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.

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

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

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…

Ford SUV February 13, 2007

Posted by wilson7 in Business-Society Issues, Manufacturing, transportation.
4 comments

When Ford introduced the Bronco II, it received several warnings from its own engineers not to release the new model due to its unstable design.  Ford executives ignored these precautions and resumed the selling of the Bronco.  However, this once popular SUV was the cause of several thousand rollover accidents, which resulted in several lawsuits that Ford is still paying off today.  Despite the negative effects from the Bronco II release, it appears Ford executives have still not learned their lesson.  The company then launched the new Explorer, which is designed after the Bronco.  Although the vehicle has several new features, it appears to have the same rollover tendencies, as did the Bronco.  Once again, it looks like the Ford Company plans to forgone the necessary alterations and released its SUV despite its safety hazards.  The launch in the Ford Explorer will result in more accident fatalities and further loss of goodwill for Ford.  Do you think there is a flaw in Ford’s technology?  Is Ford using Computer-Aided Design to help solve this rollover problem? Why is Ford’s craftwork or ability to find new techniques to handle existing problems sorely lacking? 

 In the words of Henry Ford, “A business that makes nothing but money is a poor kind of business.”

But this is exactly what his company is now doing just trying to make money and not caring about the people who buy the cars.  By launching the Ford Explorer in its current design, Ford will be contributing to the already increasing number of accident fatalities.  Through investigation, it has been found that a large number of accident deaths are caused by faulty car design. The problem with the design of the Ford Explorer stems from societies preoccupations with appearance rather than safety.  The more features a vehicle has the more luxurious it is in the minds of consumers.  However, these features increase the risk of death in an automobile accident.  Until we as consumers start to care more about our safety then how the car actually looks automobile makers will keep putting out these unsafe vehicles. How long do you think this will take?

The renovation of an American Icon January 30, 2007

Posted by K.C. in Auto's, Manufacturing.
6 comments

In the past year, there have been many headlines about American automakers loosing large amounts of money because of their lack of fuel-efficient cars. While, this is certainly one of the problems facing the industry, one American company, Ford is taking a closer look at its top-level executives as another source of their dwindling sales.

A few years ago when oil prices were still relatively low, Ford and many other American automakers were able to produce large vehicles with low fuel efficiencies and sell record amounts of them. With the recent fluctuations of oil prices, many foreign automakers have began to produce smaller more fuel-efficient vehicles that actually appeal to Americans. Companies like Honda and
Toyota have sold so many vehicles in the past 10 years that by 2010,
Toyota will capture the largest market share of any automaker in the world and become the number one selling automaker in
America.

Recently, William Clay Ford Jr. steeped down as CEO and former Boeing CEO Alan R. Mulally took his place. Mr. Ford Jr. steeped down after his attempts to turn the company around failed. One of the reasons for this change is that Mr. Ford has been criticized for his stubborn and traditional ideas about the Blue Oval. Mr. Mulally was brought in for his technical background but more importantly for his management style. During Mr. Mulally’s time at Boeing, he had to make vital strategic decisions about the company and lead Boeing to the top of the Airline manufacturing industry. Hopefully, mulally will be able to use some of his untraditional management techniques to guide Ford in their uncertain future.

http://www.nytimes.com/2007/01/26/automobiles/26ford.html?_r=1&ref=automobiles&oref=slogin

Nucor Has Different Structure Due To Stable Environment January 30, 2007

Posted by Jordi in Manufacturing, Organizational Environment.
2 comments

Our book used Nucor and Alcoa as examples of firms in environments that are relatively stable.

From page 9: “In contrast [to nimble companies like Microsoft and Intel], organizations like Nucor and Alcoa, which produce sheet steel and aluminum, respectively, face relatively stable environments in which customer needs are more predictable and technology changes more slowly.”

According to a June 13, 2006 report in The Financial Times, consolidation in the last six years has lead to a few dominant firms (Sorry, its behind a gate).

The bankruptcies at the start of the decade – which saw names such as Bethlehem Steel absorbed and disappear – has left 70 per cent of domestic flat-rolled capacity with the top three producers – Mittal, US Steel and Nucor – compared with just 25 per cent in 2003.

I worry sometimes about the pervasive image of manufacturing as stodgy and rigid while service companies or new products (especially IT) are the source of all that is good, benevolent amd flexible in the world. This may be one case of that image creeping in. Look at the way that Apple and Google are held up as paragaons of new economy ethos. However, Steel in the US still employs 210,000 people! An alternative approach to Microsoft is that it took advantage of some good moves in the late 80s to solidify its position in the OS market, and has since been fending off attacks to its near monopoly position. My point is, when was the last big innovation from Microsoft that reflected quick responses to competitors? How long has XP been out? Six years?

Does Nucor have a stable environment?

Does its value model and strategy reflect stability?

To answer the second question, we need to answer the prior question. How would we measure stability? The number of entrants? The number of exits? Stock price variability? Number of patents? Customer turnover? Employee turnover? Changes to the legislative arena?

Those all seem like plausible measures to start to look at. But, only a start. Two further issues remain.

1) What about the “destructive creativity” of capitalism? The boundaries of the company’s environment can shift. Look at Apple’s iPod and iPhone. Look at the shifts in consumer choices that drive the choices the brewers and wineries face in the Bartles and James case. If you are Gallo, are you competing against beer makers or snooty wine distributors?

2) Wgat is stability matters mroe in the minds of key decision makers. The top management team’s perception fo stability may matter far more than any attempt to more objectively measure stability or flux in an environment with shifting boundaries.