Question

1. Why did GM decide to re-design Avtovaz Niva model? Why not any other model?

2. What economic and political factors did GM face when entering the Russian Auto Market?

3. Avtovaz was a large provider of utility vehicles for the Russian Military from its inception till the fall of the communist regime. How do you see this merger affecting that market?

4. What kind of car you are planning on selling, as American cars are large and not efficient?

5. Are joint ventures GM’s primary strategy for entering emerging markets?

Answer 1

Answer 1 .

Niva is an undervalued asset of GM, the performance of the car many a times surpassed the performance level of its competitors in the west. It is a good performance vehicle overall which has a cost below $10000.

The reasons which made it unattractive was its design and the brand name

Both of which GM coul easily fix and supply to the domestic and international consumers with the evolved design and its own brand name tapping into the low cost SUV market at the same time

All the others in VAZ series did not have those niche qualities which NIva had.

ANSWER 2.

Economic and Political factors Factors GM faced

Russia is an emerging market which low stability and a comapreably new democratic system of government.

Rusian Crisis had given rise to a huge risk for GM since Russia was unstable in the eyes of foreigners thus GM had to hedge against the foreign exchange risk.

The polotical regime and law of russia was significantly different than that of US.

ANSWER 3

Autovaz had been a retail manufacturer for the brand lada having competition from UAZ. Post GM-Autovaz merger, GM started managing the company despite equal ownership of both. The merger lead to better market share for GM both domestically and internationally.

Lada Niva had an export of 31.3% for 9 months.

ANSWER 4

Despite American cars being "large and not efficient" , a niche market is growing in rusiia for wealkthy businessmen to spend money. Thus GM has planned to start assembly of HUmmer H2 SUV in russia  

ANSWER 5.

Gm has various market entry strategies. But with emerging marfkets JV is the primary mode used by GM.. In several of these markets. It has enetered into several JVs to expand with the help of other companies and governments. Some of them are:

* Shanghai GM in China.

* GM Egypt/ Mansour Group.