Gm And Motivaz Case Analysis

1. Why do GM and AvtoVAZ need each other to build and market the Niva?

The Russian automobile automobile market is one of the biggest in Europe, that’s why it’s very interesting for foreign companies including GM. Moreover, despite that General Motors likes most Western automobile manufacturers, they had a little chance for success in Russian marketplace. It’s clear that if company wants to have a profit they should offer cars by a retail price which was essentially unachievable by a company like GM, whether it builds inside or outside of Russia. Obviously, that if plants are located abroad company will have extra costs for bringing and transportation finishing products, pay for duties etc. In this connection GM was required this partnership

That is why cooperation with foreign company had drawn attention to a new product for potential consumers because of the reputation of General Motors. Thirdly, AvtoVAZ did not possess the necessary resources to launch a new model. In this case it means production technology, quality standards, knowledge etc. Fourthly, AvtoVAZ it would be much harder to compete in this segment with its competitors such as Ford, Opel, Renault and others.

3. What industrial or institutional factors continue to make the Russian automobile market so difficult to compete in?

For a start it is necessary to say about the specific of the Russian automobile marketplace. It is important to remember that in the early 2000s, the citizens were not sufficient cash to purchase the desired products. Given this fact, the company had to have either low production costs, or a sufficient safety margin to operate at a loss some time to accumulate a certain mass of consumers, and to establish reasonable prices for the end customers. Recently in Russia banks have to offer the public consumer loans, car loans and other types of loans that allowed people to purchase their desired goods, including