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Week 5 Discussion: NUMMI
- What incentive did Toyota have to enter into a joint venture and share its groundbreaking production techniques with rival GM?
A strategic partnership should be a win-win for all the partners involved. Although Toyota’s reputation as a maker of quality cars was growing, the company needed something from GM. Toyota’s prominence in America grew over the years, and the US Congress started considering restricting car imports (Glass, 2020). So, the joint venture was an opportunity for Toyota to learn how to make cars in America because if they did so, they would be unaffected by import restrictions. One of the things Toyota wanted to know was how to work with American workers because, unlike in Japan, where employees and management worked together, the American reality was plagued by rivalry between employees and management (Glass, 2020). The American auto workers spent more time on grievances and strikes than producing cars. If Toyota was to succeed in making cars in America, they would need to understand and manage the auto workforce amicably. Toyota also wanted to test whether the Toyota production system could work in America. Although the system had worked well in the Toyota City, the company’s management was concerned that this might not be the case in America (Glass, 2020). So, the joint venture acted as a testing ground for Toyota to assess how well their system would work in America.
- From GMs perspective, why did a joint venture with Toyota make strategic sense?
Regulatory compliance was one of the motivators for GM to enter a partnership with Toyota. The government’s emission guidelines encouraged the building of small cars. However, whenever GM built small cars, they lost money and were of poor quality (Glass, 2020). The partnership, therefore, would offer GM a quality small car that would make money for GM. Also, Toyota would teach GM the Toyota production system so GM could ingrain the culture of quality in its corporate DNA. A crucial characteristic of the Toyota production system is the level of collaboration between employees (Glass, 2020). Thus, GM hoped that partnering with Toyota would yield more collaborative employees, unlike the company’s crop of employees who engaged in counterproductive workplace behaviors such as engaging in drugs (Glass, 2020). For instance, when GM’s employees went to Toyota City, they were shocked that management asked for their opinions to improve production and their colleagues’ high willingness to help.
Glass, I. (2020, January 27). 561: NUMMI (2015). Retrieved November 15, 2021, from https://www.thisamericanlife.org/561/transcript