General Motors Real Strategic Issues Faced by Companies Case Paper Guidelines Don’t think that it’s just answering the bottom questions in the case. Must f

General Motors Real Strategic Issues Faced by Companies Case Paper Guidelines Don’t think that it’s just answering the bottom questions in the case. Must follow the instructions, answering those questions can be incorporated with youranalysis of the case. (1) Assume the case as real strategic issues faced by companies; they put you at the scene of the action and ask you what you would do if confronted with the same circumstances. In almost all cases, there is ambiguous and incomplete information, which allows you to practice your skills in a situation that is like real life. Your task is to determine what the key issues/ problems in the case are and then to use whatever information is at hand to suggest how the company may solve those problems. (2) Think of your case analysis as a consulting assignment that you are performing for the case firm. Thus, your audience for the case analysis is your client (an executive in the case firm) and your analysis should take the form of an executive briefing. Think about who your client is and what he/she would like to see in your report. The analysis must be professionally written and presented. (3) Do not summarize the case. The audience (your client) is very familiar with the situation and requires further analysis that goes beyond the information presented in the case. (4) Avoid laundry lists. Focus and organize your analysis. Look for frameworks from the readings that help you organize and present your analysis. (5) The best structure for your case analyses depends on the issues raised in the case that you analyze. The assignment questions for each case are a useful starting point for your analysis. Relevant book: https://l.facebook.com/l.php?u=https%3A%2F%2Fshabbiroffice.files.wordpress.com%2F2017%2F01%2Fstrategic-managment-concept-and-case-by-hitt.pdf%3Ffbclid%3DIwAR1jQOpaSgyfBCIZqX-LhlLghlGcMCbnlItO2j7cbuR09pma031Y_hdGSnc&h=AT2ONK-_Biqb1Hr2WEYQ5QuxjZ12aoBsz9YNDOFtODoSQE7YFcoXKfNzbaNzrG8n069sqv87wCFTe77DxhanhfA2eCyVcmwNoyLosucPn-1-CQbLU1iMTzWOAMdhwBcj2-e3yQ 3 pages, single spaces, use outside resources, in addition, you can attach a maximum of two pages of exhibits to support your analysis. If you decide to use exhibits, be sure to label any charts accurately and explain them in the text. Use footnotes, MLA format work cited. General Motors Defense
—General Eric K.Shinseki,Chief of Staff,U.S.Army
In October 1999 the recently appointed Chief of Staff of the U.S. Army, Eric Shinseki, held a meeting with
eight leading defense industry manufacturers. During this meeting he went into detail regarding his
vision for the type of equipment he felt the U.S. Army currently lacked. Of particular importance, he felt,
was the need for a new medium-weight armored vehicle. Contrary to past practice, Shinseki planned to
award a multibilliondollar contract within only 11 months. Any manufacturers wishing to be considered
were asked to have a prototype ready by May 2000 for testing at Fort Knox. Bill Pettipas, executive
director of General Motors Defense in London, Ontario, was among the industry leaders present during
the meeting. Pettipas was convinced that an existing GM-developed platform was ideal for the Army’s
needs. At issue, however, was how to pursue the contract. Should they go it alone, or form a joint
venture? A possible JV partner was General Dynamics. General Dynamics was interested in exploring the
possibility of a joint venture with GM for the contract, but made it clear that the firm would also submit
its own bid. For Pettipas, the question was which arrangement would result in the greatest likelihood of
success.
GENERAL MOTORS General Motors (GM), the world’s largest vehicle manufacturer, designed, built, and
marketed cars and trucks worldwide. GM had been the global automotive sales leader since 1931. GM
employed about 355,000 people. GM cars and trucks were sold under the following brands: Buick,
Cadillac, Chevrolet, GMC, Pontiac, Saab, Saturn, and Oldsmobile. GM also produced cars through its
Holden, Opel, and Vauxhall units. Nonautomotive operations included Hughes Electronics (DirecTV),
Allison Transmission (heavy-duty automatic transmissions), GM Locomotive (locomotives, diesel
engines), and GM Defense (light armored vehicles). GM had a 49 percent stake in Isuzu Motors and 20
percent stakes in Fuji Heavy Industries (Subaru), Suzuki Motor, and Fiat Auto (Alfa Romeo, Lancia). The
GMAC subsidiary provided financing.
GENERAL MOTORS DEFENSE In 1999, less than 1 percent of GM’s total annual revenues of $167 billion
came from defense. GM had a rich history of military vehicle production. GM supplied its first vehicle for
the U.S. military during World War I and had continued to supply vehicles ever since. After World War II,
GM continued producing armored vehicles including the M551 Sheridan light tank. General Motors
Defense (GMD), London, Ontario, was a group of GM-owned business units engaged in the design,
production, and support of light armored vehicles, their supporting turret systems, and a wide range of
commercially based military trucks. GMD consisted of research, design, and manufacturing facilities in
London, Ontario; Goleta, California; Troy, Michigan; Adelaide, Australia; and Kreuzlingen, Switzerland.
GMD also had offices in Washington, D.C.; Ottawa, Canada; and Canberra, Australia, for government
relations. GMD was a proven manufacturer of quality armored vehicles and turrets. Its two main
platforms were light armored vehicle (LAV) and Piranha. GMD supplied these platforms to numerous
military forces in over 15 countries, including Australia, Canada, Saudi Arabia, Switzerland, and the
United States. These vehicles had been used in operations in Bosnia, Somalia, Cyprus, Panama, Haiti,
and as part of Operation Desert Storm. GMD was also well equipped to provide services in
project/program management, subcontract management, and product support. GMD’s North American
chassis operation had a large plant, which was comprised of a manufacturing and test facility covering
34,000 square meters, a 1.2-kilometer banked test track, and a 310,000-liter swim tank. GMD’s
advanced production technologies included computer-driven laser cutters, rectilinear robotic welders,
CAD-CAM systems, and flexible machining centers. GMD’s weapons and electronics operation also had
proven experience in designing, manufacturing, and integrating turrets and fire control systems. GMD
was recognized globally as the leading manufacturer in multi-purpose lightweight turrets. GMD had
recently acquired MOWAG of Switzerland. MOWAG was in charge of designing and developing the
Piranha family of vehicles as well as the HMMWV-based Eagle 44. GMD greatly benefited from
MOWAG’s innovative design and world-class manufacturing techniques. GMD had also recently
acquired Military Trucks in Detroit, Michigan. Military Trucks sold commercially based GM vehicles
adapted for use by military customers. Lastly, General Motors Defense Australia (GMDA) was a center of
production for LAV-25 turret systems, and responsible for Asia-Pacific markets.
Main Platform of GM Defense GMD’s light armored vehicles (LAVs) were produced in a number of
different variants. These included mortar, anti-tank, ambulance, logistic, personnel carrier,
recovery, air defense, command and control, electronic warfare, mobile repair, reconnaissance, and
assault guns with 90mm and 105mm main guns. In the LAV family, the LAV III had been recently
developed and was being placed into production. The LAV III was a four-wheel drive (selective eightwheel drive), armored vehicle weighing approximately 18 tons. It was designed and manufactured with
a common hull configuration and was well suited for multiple capability, joint, and combined arms
formations. The LAV III could attain speeds of 62 mph (100 kph) on the highway and had a maximum
range of 312 miles. The basic infantry carrier vehicle (ICV) had armor that protected the two-man crew
and seven on-board soldiers from machine gun bullets, mortar, and artillery fragments. The LAV III ICV
variant included configurations such as the reconnaissance, anti-tank guided missile, and medical
evacuation vehicles, as well as carriers for mortars, engineer squads, command groups, reconnaissance,
and fire support teams. The Mobile Gun System variant comprised a General Dynamics Land Systems
105mm cannon mounted in a low-profile turret integrated on the General Motors LAV III chassis.
Bill Pettipas In 1982, Bill Pettipas worked at Canadian Forces headquarters in Ottawa. During his 28
years in the Canadian military, he had once served as commanding officer of the Royal Canadian
Regiment in London, Ontario. When he was sent to Norway to look at a missile system in 1982, he was
approached by a General Motors executive who offered him a sales position at GMD. Pettipas rejected
the offer but a year later changed his mind, retired from the Canadian Forces, and joined GMD. Pettipas
started his new job as a domestic sales manager. His responsibility was to sell to the Canadian military.
However, Pettipas struggled as he made the transition from the armed forces to business. He did not
initially know much about the business, but soon determined that people did not buy a product as much
as they did the personality that sold it. He believed that sales success was based on building
relationships, even in an industry in which sales were about a $700,000 to $2 million armored vehicle.
Not only did he focus on the final customer, the soldier, he also really believed in his products. In the
1980s, GM Diesel (the former name of GM Defense) grew at a slow, steady pace as small contracts gave
way to larger ones, including deals with Australia, New Zealand, Saudi Arabia, and the U.S. Marines.
There were, however, hard times in the late 1980s when GM attempted to sell its Diesel division, but it
turned out that there were no takers that were acceptable to General Motors. The division itself then
made a bid for greater freedom and won and convinced GM Corporation to allow the GM Locomotive
Group, of which GM Defense was a part, to have its own Strategy Board, giving it more autonomy to
conduct its business. Early in 1999, Bill Kienapple, former executive director of GMD, handpicked
Pettipas as his successor. Kienapple recognized the value of Pettipas’ military background and
charismatic leadership style. Kienapple believed that employees were very loyal to Pettipas, and that he
had a well-rounded understanding of the business as well as of the customer. Pettipas could walk the
GMD shop floor and call to just about everyone by name. Pettipas was both visionary and possessed a
keen ability to focus on the core of an issue. With common sense, he could get an idea of how to
achieve his goals, and do it through the power of personality.
THE U.S.ARMY The U.S. Army was made up of ten active duty divisions—six heavy divisions and four
light divisions. The brigades, battalions, and companies within a heavy division were organized around
the conveyances— tanks or Bradley fighting vehicles—that take that unit to the fight. The brigades in a
light division such as the 82nd Airborne were organized around infantry who parachute, march, or
helicopter to the fight. The U.S. Army was well suited for the war it was designed to fight: a huge
counterstrike against an invading Soviet Army on the plains of Central Europe. The U.S. Army’s
institutional identity was reflected by its heavy pieces, especially the near-invincible Abrams tanks. None
of these tanks was destroyed by the enemy in the 1991 Gulf War. The Abrams had first been completed
in 1980, and it had been a peerless war machine. It could kill enemy tanks at standoff range, beyond the
reach of enemy fire. Because of its armor, the Abrams could survive almost any strike. It had a layer of
metal protection so thick that the tank weighed 70 tons. The Abrams was too big to be transported
efficiently to the battlefield by air. The only means to transport the Abrams was by ship, a process that
took weeks. Even after the Abrams was transported to the battlefield by ship, it guzzled a gallon of fuel
per half mile traveled. Because a huge fuel supply followed the Abrams and other armored vehicles to
war, it created a division’s cumbersome logistic tail. Support units, such as those handling fuel, spare
parts, and maintenance, comprised more than 80 percent of the heavy Army’s lift requirement, the
effort of getting itself to war. The material that had to be loaded, transported, unloaded, and set up just
to support the fighting was often discussed in terms of the tooth-to-tail ratio. Among the U.S. military
services, the Army had 480,000 active members, as against 375,000 in the Navy, 359,000 in the Air
Force, and 175,000 in the Marines. The personnel budget allocated to the active Army was 40 percent
more than the Navy and the Air Force and more than three times of that for the Marines. The U.S. Army
was fragmented in terms of culture. Any plan to blend the light and heavy elements of the Army would
create a more common culture. The Army valued its specialization. For example, a cadet at West Point
chose his branch during his senior year at the Academy. Each branch had a set of rituals and traditions.
Thus, only a minority of those in the army saw transformation as something that they needed to
contemplate.
The U.S. Army’s Equipment Need During the 1990s, the U.S. Army faced missions that it did not
welcome and found itself ill-equipped to perform. During the Cold War era, the U.S. Army knew exactly
who the enemy was, how it would fight, and where. Even though the U.S. Army’s two main combat
vehicles—the Abrams tank and the Bradley fighting vehicle—did not share a common chassis and each
thus required its own logistics tail, the Army managed to find ways to circumvent the problems. For the
enormous logistic tail problem, the U.S. Army positioned fuel, spare parts, and support material in the
battlefield in advance. For the tanks’ weight problem, the U.S. Army reinforced the various European
bridges the tanks would likely cross to engage the Soviet armor. However, the need for the
transformation became apparent during and after the 1991 Gulf War. The desert war revealed two
potentially disastrous flaws. The first problem was that the armored units could not reach the battlefield
quickly. After the Iraqi Army took Kuwait in August 1990, the U.S. Army immediately began to amass its
forces in the desert. On the eve of the war, in January 1991, the U.S. Army eventually had a full set-up of
its heavy and light divisions: nearly 600 Bradley fighting vehicles and Abrams tanks with 200,000 soldiers
in the theatre. The five-month build-up was a tremendous accomplishment by U.S. Army standards.
However, this very fact sounded alarm in the U.S. military. The second problem was that the U.S. Army’s
quick-response light forces needed to have different equipment to stop Iraqi forces by themselves. Even
though three battalions of the 82nd Airborne, about 4,000 soldiers, arrived in Saudi Arabia within a
week, they were too vulnerable to fight against the Iraqi Army in the desert. In 1994, Bradley fighting
vehicles were transported to Cap Haitien, Haiti, but the heavy vehicles could not move even two blocks
beyond the port because of their 30-ton bulk. In 1995, when a mechanized infantry brigade attempted
to make its way in Bosnia, it got bogged down on the inferior roads and bridges of the Balkans. In the
Kosovo War, the Serb Army maneuvered at will in Kosovo, but the U.S. Army had to watch helplessly
from the other side of bridges they could not cross. The operational problems of the U.S. Army in the
Gulf, Haiti, Bosnia, and Kosovo made it clear that there was an apparent gap between the U.S. Army’s
light units, which were too vulnerable, and its heavy units, which were too slow. Politically, the Army
was losing ground to the more glamorous sister services operating from the sea and especially, from the
air and space.
General Shinseki In November 1942, Shinseki was born on the Hawaiian island of Kauai. His grandfather
had immigrated to Hawaii from Hiroshima, and his parents were Nisei, American-born children of
Japanese immigrants. During World War II after Pearl Harbor, Nisei were categorized as enemy aliens in
spite of their status as American citizens. Shinseki nonetheless had a typical American childhood. By the
end of high school, he had many colleges to choose from, and he opted to go to West Point. After
graduation, Shinseki shipped out to Vietnam. However, his first duty only lasted three months. Shinseki’s
infantry company was hit by mortar. While being evacuated to medical facilities, he was even more
seriously wounded in a helicopter crash. Shinseki was in the hospital for the next seven months
recovering from his injuries. In February 1970, Shinseki went back to Vietnam again. This time, he took
charge of an armored cavalry unit. Seven weeks later, he stepped on a mine and lost his right foot and
part of his lower leg. Shinseki again had to be evacuated to hospital where he remained for a year.
During those painful months of recovery, Shinseki initially decided to leave the U.S. Army and return to
civilian life, but changed his mind again. He had observed many officers leaving the Army and thought
that some of them ought to stay and pass along what they had learned from the experiences in the
Vietnam war. Even though he had an artificial foot, he worked hard to make himself responsible for
reaching and maintaining the necessary physical requirements in the U.S. Army. In the 1980s, as a
colonel, Shinseki commanded American forces in Germany. While in charge of a
heavy brigade of the U.S. Army, he witnessed the Soviet Union collapse. In the absence of a major
confrontation with the Soviet Union, he was later responsible for peacekeeping in Bosnia. In 1998,
Shinseki became ViceChief of Staff, serving under General Dennis Reimer. Reimer wanted to drastically
reorganize the Army’s echelon structure, which was outlined in Breaking the Phalanx: A New Design for
Land Power in the 21st Century, a book by Colonel D. A. Macgregor. Reimer believed that the drastic
reorganization would make the U.S. Army leaner and more efficient. Even though Reimer distributed
copies of the book to every general in the U.S. Army, he faced strong resistance from senior officers. In
June of 1999, General Shinseki was appointed the U.S. Army’s 34th Chief of Staff. Shinseki promised to
reform the bulky U.S. Army. He proposed to make the U.S. Army nimble as well as lethal. He wanted to
create a U.S. Army that would be flexible enough to perform peacekeeping missions or to fight an all-out
war against Iraq and North Korea. Moving away from traditional, ponderous tanks and armored vehicles,
Shinseki proposed to bring whole new advanced systems and technologies into the Army.
COMPETITORS TO GMD General Dynamics General Dynamics (GD) was a leading defense company. GD
operated in four areas: combat systems (tanks, amphibious assault vehicles, and munitions), marine
(warships and nuclear submarines), aerospace (business jets), and information systems and technology
(command and control systems). It employed 43,000 people worldwide and had annual sales of $10
billion. In 1952, GD was established after its predecessor and current operating division, Electric Boat,
acquired the aircraft company Canadair Ltd. As a subsidiary, Electric Boat built nuclear-powered
submarines (Seawolf, Ohio, and Los Angeles classes). In 1982, GD added its Combat Systems business
unit, General Dynamics Land Systems (GDLS). GDLS built the M1 tank and Abrams combat vehicle. In
1997, GD added an information systems and technology business unit, Advanced Technology Systems,
and returned to the aerospace business with Gulfstream in 1999. GD’s corporate headquarters was in
Falls Church, Virginia, near Washington D.C. Government relations, international affairs, legal affairs,
public relations, human resources, and finance were among the functions managed by the headquarters
staff. In particular, Government Relations served as the company’s liaison with Congress and all
branches and agencies of the U.S. federal government that bought or oversaw the procurement of GD’s
products and services. GD’s International department represented the company’s interest before the
elements of the U.S. Government responsible for defense trade policy and international arms and
technology transfers. For most of the U.S. Department of Defense programs, General Dynamics had
shared the market with United Defense. Representing the ground combat system of the United States,
the signature product line of GD was the Abrams main battle tank; that of United Defense was the
Bradley fighting vehicle.
General Dynamics Land System (GDLS) General Dynamics Land System (GDLS) was a wholly owned
subsidiary of General Dynamics based in Sterling Heights, Michigan. GDLS manufactured tracked and
wheeled armored vehicles, as well as amphibious combat vehicles, for the U.S. Army, the U.S. Marine
Corps, and international allies. In 1982, GDLS was formed after its parent company acquired and
integrated Chrysler Corporation’s defense operations. GDLS’s principal products were the U.S. Army’s
M1A2 Abrams SEP main battle tank, internationally recognized as the world’s finest main battle tank,
and the U.S. Marine Corps Advanced Amphibious Assault Vehicle (AAAV). GDLS had delivered more than
8,500 Abrams main battle tanks to the U.S. Army and international allies. GDLS had been a great
contributor in the U.S. Army’s core programs: Abrams Tank, Future Combat System, Crusader, Future
Scout & Cavalry System, Wolverine, and Fox programs. GDLS had worked in partnership with the U.S.
Army on all of these programs to ensure its mission success. GDLS employed 3,500 people in eight states
and had annual sales that exceeded $1.1 billion. GDLS operated the United States’ only main battle tank
production facility, in Lima, Ohio. In the other satellite plants, GDLS machined Abrams components.
Recently, GDLS was trying to develop more medium- and lightweight armored vehicle systems. GDLS
had a proven record in enginee…
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