ANATOMY OF A FAILED ALLIANCE—GENERAL MOTORS AND DAEWOO

Synopsis

1. Company snapshot2. Case study in brief3. COMMON THREADS: CORE PROBLEM

DEFINITION4. Questioner5. conclusion

GENERAL MOTORS• General Motors, one of the world's largest automakers, traces its

roots back to 1908. With its global headquarters in Detroit, GM employs 204,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, Germany, the United Kingdom, Canada, and Italy. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. General Motors acquired operations from General Motors Corporation on July 10, 2009, and references to prior periods in this and other press materials refer to operations of the old General Motors Corporation.

Daewoo International Corporation• President & CEO- Kim, Jae-Yong 金在鏞• Address:-• 84-11, Namdaemunno 5-ga, Jung-gu, Seoul, Korea (100-753)C.P.O. Box 2810• Phone no.02-759-2114, FAX 02-753-9489• Number of employees- 1,779(as of December 2009)• Major business area• International trading, resource development in foreign countries, domestic and international investments

in business, foreign projects, support of small and medium sized companies• Organization • 1. Management (3 Divisions) : Corporate Planning Division, Finance & Accounting Division, Ethics

Management Division

2. Sales (6 Business Groups) : Business Group I : Steel Division I, Steel Division II, Special Steel DivisionBusiness Group II : Machinery & Plant Division, Automotive Component Division, Electronic Industry Division, Textile Division, Special Business Team, Apparel TeamBusiness Group III : Steel Raw Materials Division, Metal Division, Non-Ferrous Metal DivisionBusiness Group IV : Chemical Division I, Chemical Division II, Chemical Division IIIEnergy & Resources Development Group : Commodity & Agro-Resources Division, Mineral Resources Development Division, E&P Operation Division, Energy Development TeamDomestic Business : Busan Factory, Masan Department Store

Case Study: GM and Daewoo

• Formed an alliance in 1984 to• manufacture small cars in South Korea• _ Both invested $100m in a 50/50 JV• _ Day-to-day management left to South• Koreans• _ Both sides saw the JV very positively –• _ GM doubted that they could manufacture a• small car for cheaper in the US• _ Daewoo was getting access to engineering• skills of GM and US market

Evolution of Events

• 1987 – South Korea had become a• democracy – workers were asking for• wage increases• _ Frequent halt in the LeMans production• _ Daewoo responded by doubling wages• _ Suddenly cheaper to build Opels LeMans in• Germany• _ Problems with quality• _ GM was very frustrated with Daewoo

Other Events

• Daewoo was however equally frustrated• with GM• _ Daewoo Group Chairman Mr. Kim complained• that he was treated shabbily and that GM• execs were arrogant• _ GM did not allow Daewoo to expand their• market in the US or Eastern Europe• _ Did not want to allow Daewoo to double• capacity• _ Alliance was dissolved and Daewoo• bought GM’s interest in 1992• _ In 2002, GM bought Daewoo