Question

>> General Motors, two years after it was saved by U.S. government bailout, is trumping its last investments in China, of all places. CBS News business and economics correspondent, Rebecca Jarvis, is in Shanghai, China with more on the American automaker's big Asian announcement.

>> Rebecca Jarvis: Here on the streets of Shanghai, American cars are more popular than ever. In fact, the U.S. automakers like General Motors sell more cars here than anywhere else in the world, and while that's good news for the American car companies, it makes many question what it will mean for American jobs. [background noise] Visit General Motors in Shanghai, and you'll find a lot of what you would in Detroit.

>> Rebecca Jarvis: So how similar does this plant look to one in the United States?

>> It's very similar. I mean, the processes are the same, the systems are the same, the quality systems are the same. Really, the only difference are the employees -

>> Rebecca Jarvis: With its Chinese partner, SAIC, GM manufacturers Buicks, Chevys, and Cadillacs in China for their Chinese market that employs more than 13,000 people throughout the country. On Wednesday, GM opened an advanced technology center in Shanghai meant to help it design lighter, safer, and more efficient cars for a market that has proved crucial to its survival.

>> Rebecca Jarvis: How important is being here in China to General Motors and the future of your business?

>> It's obviously very important. This is a strong growth market. It's a growth industry. We're here in China to [inaudible] local market.

>> Rebecca Jarvis: Last year, Chinese consumers bought 16.6 million cars. That's five million more than the number of cars sold in the entire United States. So far, all of the cars GM sells in the U.S. are also made there.

>> Rebecca Jarvis: Do you see a time or a day when GM could be producing cars here and shipping them back to the U.S.?

>> I think right now we have our hands full just producing cars for the local market.

>> Rebecca Jarvis: While General Motors won't say whether eventually those electric vehicles are going to be produced for the United States here in China, clearly, China has a competitive advantage. Lower costs and skyrocketing sales.

How would you characterize the alliance between GM and SAIC Shanghai?

What has driven the GM alliance in Shanghai?

How is the VRIO framework established within the GM alliance in Shanghai?

How can GM combat opportunism that may occur from being in the China market?

What will determine successful performance from the alliance?

Answer 1

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How would you characterize the alliance between GM and SAIC Shanghai?

The purpose of the cooperative relationship between SAIC and GM is to dominate and control the automotive market in China. The two companies have teamed up to produce a full range of vehicle models and designs for the local industry, paving the way for the broad Asian market. GM aimed to tap the potential Chinese car market and SAIC aimed at accessing GM technology had to diversify its manufacturing. Although the two firms had the difference, they still cling to each other to enable them to maintain themselves in the market.

What has driven the GM alliance in Shanghai?

GM was looking to later enter the Chinese vehicle market and the Asian market. The low production cost in China impelled GM to invest in the country. As a domestic company, SAIC had already built market share that GM wanted to share and develop new products, as well as change existing ones to dominate China's automotive sector. On the other hand, SAIC wanted to access and integrate GM's technology into their production. The team up will encourage and bring home a lot of young SAIC engineers to have full access to the latest GM designs and models in the US. GM set up a research unit, and SAIC wanted a share of GM's operations to grow its business.

How is the VRIO framework established within the GM alliance in Shanghai?

The VRIO method is the assessment of an internal resource's competitive potential based on importance, scarcity, imitability and organizational interest. The pooling of the two companies' diverse technological and design skills has allowed them to retain market share, especially in China, and to the upper hand.

Rarity - Through their research units such as the Pan Asia Technical Automotive Center (PATAC), the two companies have created unique products also made for the government that are covered by intellectual property rights and the profits reserved for both companies to enjoy.

Imitability - Its designs and products are protected and patented by intellectual property rights so duplicating them is illegal. The secrets of their trademarks and inventions are tightly guarded business secrets which makes it very difficult to imitate.

Organisation - They structured their activities in order to make best use of their advantageous resources. They combine the importance, the resource shortage, their inimitable qualities in order to give them the best for their competitive advantage.

How can GM combat opportunism that may occur from being in the China market?

By being on the China market, GM will provide them with opportunities to diversify the products and expand operations to produce enough goods for the local market and for export. In China, conditions are favorable for expanding and manufacturing cars on a large scale, and so they should be targeted not only at the local market but also at the international, if not global, market.

What will determine successful performance from the alliance?

The GM vision in China, with its partners in China (General Motors China), is to be the best automotive group. Good results for partnerships would be dependent on the contractual terms they entered into the relationship being examined. The contractual terms would have to be honored and followed in order to avoid a potential premature termination of the relationship. His innovation and creativity will also determine their success in meeting the changing consumer needs locally and globally. They would also open more branches in the country and expand into other countries as a collaboration to fill market shortages that would have left a vacuum for existing companies. They can also diversify their goods and build more auto motives like motorcycles, which will ensure their customers' long-term service delivery.

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