Holy Angel University
School of Business and Accountancy
Management Department
Strategic Management
2nd Semester, SY 2022-2023
FINALS: CASE STUDY
Submitted By:
Frances Nicole Colis
Kyle Stephen Español
Leilani Gomez
Alyana Mae Gopez
Frances Marie Ocampo
Karl Marx Tongol
Christine Tubangui
A-339
Submitted To:
Mr. Danzen Olazo
Executive Summary
NUMMI, or New United Motor Manufacturing Incorporated, was a joint venture
established by General Motors and Toyota in 1984 following the foreclosure of the
former General Motors Fremont Assembly Plant in Fremont, California. The
development of NUMMI from North America's worst auto plant to its greatest in less
than six months is a famous example of rags to riches.
They thought there was nothing they could do to change the situation;
General Motors closed the facility two years ago. The employees preferred to see
the union fail because of how strong it was to their way of doing things. With the rise
of Japanese automakers over the past 10 years, a new style of communicating with
suppliers has arisen. An industry traditionally known for close working relationships
with suppliers received a new focus on supplier relations from the Japanese
immigration. NUMMI launched a supplier development strategy after developing its
own "business culture."
This program comprises information exchange that is crucial to supplier
performance as well as efficient supplier communication. The NUMMI strategy may
have a significant effect on how US companies work with their suppliers.
Background
The American auto industry might have been obtained by a vehicle plant in
Fremont, California. Ira Glass, the host, introduces the New United Motor
Manufacturing Inc., or NUMMI, narrative. NUMMI was established as a joint venture
by General Motors and Toyota in 1984. Toyota revealed to GM all of their
manufacturing techniques at NUMMI, including how it created some of the strongest,
most dependable automobiles in history. GM planned to apply the lessons learned
from NUMMI to all of its other operations, the nation, and the globe. Frank Langfitt
and one of our producers, Brian Reed, have been traveling around the country
talking to GM workers and managers about what happened at NUMMI, and
especially about what went wrong at GM that it had so much trouble for so long
adopting the techniques it learned over a quarter century ago.
Statement of the Problem
The GM plant's poor performance, which was characterized by low
productivity, poor quality, and high labor costs, was the key issue found in the case
study. Numerous reasons were given for this, including a harsh labor-management
relationship, old industrial methods, and a lack of dedication to assurance of quality.
So, the NUMMI case study's issue statement can be stated as follows:
1. How can the NUMMI eliminate or lessen the key challenges that they are
facing in terms of productivity, labor relations, quality, and organization
culture?
SWOT Analysis
Strengths
Superior product and services quality - can aid Nomis Solutions in extending its
market share due to the fierce loyalty of its current clientele.
Strong relationship with existing suppliers – Nomis Solutions, a market leader in
its field, enjoys solid working relationships with all parties involved in the supply
chain, including suppliers.
Strong Brand Equity and Brand Awareness – In the domestic market it serves,
Nomis Solutions' brands are among the most well-known.
Weaknesses
Lack of critical talent - "think Nomis Solutions is lacking in key talent, particularly in
the area of technology & digital transformation. In light of advancements in artificial
intelligence (Al) and machine learning, Nomis Solutions is striving to restructure
procedures.
Implementation of Technology in Processes – Nomis Solutions has incorporated
technology into backend procedures, but it hasn't been able to fully utilize that power
in front end processes.
Customer Dissatisfaction – Despite the fact that product demand has not
decreased, Nomis Solutions customers are beginning to feel unsatisfied.
Opportunities
Developments in Artificial Intelligence – Artificial intelligence advancements can
help Nomis Solutions construct better recommendation engines, anticipate consumer
demand more accurately, and serve specialized markets.
Changing Technology Landscape – The technological environment in which
Nomis Solutions operates is changing as a result of the explosion in machine
learning and artificial intelligence.
Increase in Consumer Disposable Income – With more people having disposable
income, Nomis Solutions can create a new business model where users gradually
pay for utilizing its products.
Threats
Growing Protectionism - In order to mitigate the risk of rising protectionism, Nomis
Solutions should do everything from store data on worldwide markets to diversify risk
by operating in nations with various economic cycles.
Increasing bargaining power of buyers – The bargaining power of Nomis
Solutions' consumers has greatly expanded over time, which is driving down prices.
Government Regulations and Bureaucracy -Under increasing pressure from
protests, Nomis Solutions should keep a careful eye on the rapidly evolving
government rules. Groups and non-governmental organizations, particularly with
relation to elements of labor and environmental safety.
Alternative Courses of Action
ALTERNATIVE 1: Implement comprehensive programs for employees to
ensure their efficiency and effectivity to excel in their roles.
Advantages:
- This could involve providing extensive training sessions and workshops to
enhance the skillset of employees in their job specifications
- To ensure that employees are confident to perform the tasks needed
efficiently and effectively
- By this, NUMMI plant can be more reliable so that their staff can execute their
jobs as productive as possible.
Disadvantages:
- Higher cost needed for training and workshops
- Time-consuming – training programs may require a significant amount of time
to accomplish.
- Resistance to Change – employees or staff may resist the change brought by
new training programs
ALTERNATIVE 2: Implement a performance-based incentive system to
motivate and reward employees for their contributions to productivity and
quality enhancements.
Advantages:
- Employees who perform well and contribute positively to the plant's
performance are recognized and rewarded through incentives or bonuses.
- It can help create a culture of performance excellence, where employees are
encouraged to go above and beyond in their roles to achieve the plant's
objectives.
- It serves as a motivator to employees to seek development and improvement
in help for the success of the business
Disadvantages:
- Short-term focus: employees tend to only perform in a short-term because of
the incentives or reward system implemented.
- Favoritism or Bias: Managers may tend to reward employees based on their
own perceptions.
- Higher Cost: May involve a huge amount of budget for the rewards and
incentives.
Recommendation
While an incentive-based system can be motivating for employees, it may also
create a culture of competition and individualism, which can be counterproductive to
the teamwork and collaboration necessary in a manufacturing plant. Additionally,
incentive-based systems may lead to employees focusing on short-term goals rather
than long-term improvements and continuous learning.
On the other hand, implementing comprehensive training and development
programs can help employees improve their skills and knowledge, leading to a more
capable and efficient workforce. This approach can also foster a culture of
continuous learning and improvement where employees are encouraged to seek out
new knowledge and techniques to enhance their performance.
Furthermore, investing in employee training and development can lead to higher
employee satisfaction and retention rates, which can be crucial for maintaining a
stable and engaged workforce. By providing opportunities for growth and
development, employees are more likely to feel valued and invested in the success
of the company.
Overall, while an incentive-based system can be beneficial in some cases,
investing in employee training and development is a more sustainable and effective
approach to improving productivity and quality in a manufacturing plant.
References:
403: NUMMI. This American Life. (2017, December 14). Retrieved April 18, 2023, from
https://www.thisamericanlife.org/403/transcript
NUMMI (2010). This American Life. (2021, November 1). Retrieved April 18, 2023, from
https://www.thisamericanlife.org/403/nummi-2010