I do not have the numbers but GM was able to get significant gains with the union. So remember Nummi was so successful because GM shut down the plant and the workforce realized they needed to change and improve their work for the plant to survive when it re-opened with Toyota? GM was not successful implementing this in other plants because the other plants workers were not scared of loosing their job. Well with bankruptcy everyone realized they had to change. So for example, instead of giving yearly bonuses to plant workers when the company did not perform well, now they are rewarded based off company performance. Seems like an obvious change but prior GM had no negotiating power for even the smallest improvements. I have mixed feelings about the labor unions but it is something we have to work with even outside the U.S.
From my understanding, after transforming the manufacturing side of the business and shedding historic problems with pension plans, union agreements, dealers, etc we became pretty competitive. However, we still had lower EBIT and this lead the company to realize we were not competitive in our SG&A. For example, we have 30 versions of SAP so we spend so much time just trying to compare data among different platforms.
But I do agree labor force and human capital is key to the future of the company and GM could do a better job in this aspect as well.
Thanks for sharing Ercu!
I heard about this company when I was researching Turkey for my Field 2 assignment and was amazed by their success. I think they were bought by Delivery Hero (German company that operates internationally in over 29 countries) for $589M earlier this year. I believe Yemeksepeti and other delivery services are able to add value due to traffic congestion in most of the cities/countries it operates in. Ive heard the traffic in Turkey is horrendous and can take from 1-4 hours. The delivery bikes can weave in and out of traffic to deliver within 45 minutes. Consumers are willing to pay a higher price as they do not want to be stuck in traffic for hours. Additionally, restaurants capture customers that would not otherwise be at their physical location. I would be worried about the longterm success of the business model as it seems easily replaceable by other companies willing to offer a lower price.
Although, I am not as financial savvy as the author ;), below are my two cents.
I think this is a great model that really brings value to the customer by cutting out waste and inefficiency in the process. However, I do not think the customers attracted to Lending Club are the customers its competitors, banks and credit unions, want. It seems like this club would attract customers who could not get a loan otherwise due to risk of the company or expected future cash flows as we learned in FIN 1 🙂
My hunch, is that a company with good credit worthiness and a solid business plan would get funding directly through well know institutions vs paying extra to a fairly new online company (just had IPO) with no long-term reputation. I would be interested to see the bad debt and default rates of the Lending Club vs banks and credit unions.
I think this is a good model to capture small/mid sized companies that would be otherwise be rejected but I do not think it is a game changer for the competition. If the model is based off of more risky businesses, I would be a little worried about the long-term sustainability of Lending Club as banks and credit unions are diversified with deposits and other products.
Hello Hao! Thanks for pointing out my confusion 😉
To clarify, the business model of GM is to build and sell the world’s best vehicles. In the past, GM’s strategy was to build vehicles to fit local markets. The strategy has changed to using common platforms of vehicles for global markets in an effort to share research & development and thus capture value by offering the most innovative technology world-wide. The manufacturing side of the operating model aligns to this strategy. However, the admin side (like financial reporting systems, support services and indirect materials) never aligned. As a result, GM made one side of its operating model very efficient but since they did not align the admin side thus they are still inefficient. The inefficiency creates waste, millions of dollars, that could be used to re-invest in new innovative products to create value for the customers.
Unfortunately, fuel efficient cars are not the game changer for the automotive industry. Companies like GM and Tesla have invested tons for electric vehicles but the demand is just not there. Tesla only captures a small fraction of the market (~30K units per year) and is not profitable. I think the future is more aligned with being able to offer the customer more value through technology. Like wifi enable cars, autonomous parking features, better utilization with phone applications etc.
Hi Dino! I enjoyed reading your article about a traditional company being successful as many of our peers wrote about fairly new companies. I am familiar with the popularity of prepaid cellular services in Latin America and think this is a good model for Direct TV. It can be used even in developed economies like the USA to reach lower income consumers. Furthermore, the potential in emerging economies is big, if Direct TV is not using this service in countries like China and India already.
However, I do not think this strategy change is innovative but just a small shift. It will not keep the sleeping giant alive for long. Direct TV needs a drastic change if it ever wants to complete with non traditional companies like Netflixs/Hulu. These companies also have low monthly subscription fees and no upfront costs for unlimited access to library content. Apps can can be accessed on any mobile device. In Latin America and other developed and developing nations, cell phone accessibility is high even among the low income population. So I think pre-paid TV will be attractive for awhile but not for long as internet accessibility and mobile device penetration increases even more.