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This was driven by the company culture and reliance on volume contracting. Long forecast means that when the times were bad and sales dropped, GM was left with higher volume orders, which contributed towards excessive inventory.
Legacy Payments
Every year the cost of retired workers’ health care added $1,400 to the cost of each car compared with those made in the Asian and European transplants. So, GM kept production high and sustained sales with costly dealer incentives and heavily discounted fleet sales. GM’s liabilities in supplier payments, workers entitlements and dealership commitments would have led them to bankruptcy. 2. Describe how the internal managerial culture at GM might have contributed to their bankruptcy?
Lack of cohesion
GM operated the different divisions of the company as separate, independent entities or business units. Although this structure was successful at times, it created a fragmented management mind-set. With a large number of autonomous units, it was difficult to reach agreement and rally behind one single idea. As a result, many strategies and plans were diluted or made overly …show more content…
GM’s management spent a lot of time fighting change and were averse to risk; they obstructed new technology and were not quite ready to reduce complexities in their supply chains or to go lean. They were in a state of denial due to past success, but did not see the need to change as the consumer demand has changed over the time. GM's problems come over a long period; it was a slow erosion of market share.
Forecasting
Forecasting was a significant problem for GM. Long forecasting cycles were a traditional practice for the organization; which caused firms to miss important shift in the market demand. This has led to excessive inventory and sometimes stock-outs. 3. Describe how inventory turnover and cash-to-cash cycle time could have been used by GM to indentify supply chain management problems.
Inventory Turnover
In accounting, the Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a
Legacy Payments
Every year the cost of retired workers’ health care added $1,400 to the cost of each car compared with those made in the Asian and European transplants. So, GM kept production high and sustained sales with costly dealer incentives and heavily discounted fleet sales. GM’s liabilities in supplier payments, workers entitlements and dealership commitments would have led them to bankruptcy. 2. Describe how the internal managerial culture at GM might have contributed to their bankruptcy?
Lack of cohesion
GM operated the different divisions of the company as separate, independent entities or business units. Although this structure was successful at times, it created a fragmented management mind-set. With a large number of autonomous units, it was difficult to reach agreement and rally behind one single idea. As a result, many strategies and plans were diluted or made overly …show more content…
GM’s management spent a lot of time fighting change and were averse to risk; they obstructed new technology and were not quite ready to reduce complexities in their supply chains or to go lean. They were in a state of denial due to past success, but did not see the need to change as the consumer demand has changed over the time. GM's problems come over a long period; it was a slow erosion of market share.
Forecasting
Forecasting was a significant problem for GM. Long forecasting cycles were a traditional practice for the organization; which caused firms to miss important shift in the market demand. This has led to excessive inventory and sometimes stock-outs. 3. Describe how inventory turnover and cash-to-cash cycle time could have been used by GM to indentify supply chain management problems.
Inventory Turnover
In accounting, the Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a