Capacity Planning at General Motors India

Abstract:

This case deals with General Motors Company, one of the world's largest car and truck manufacturers. General Motors began its Indian operations in 1928, assembling Chevrolet cars, trucks, and buses. However, in 1954, the corporation ceased its assembly operations. After the liberalization of the Indian economy, if formed a 50:50 joint venture with Hindustan Motors, and produced and sold Opel branded vehicles at its Halol manufacturing facility in Gujarat. In 1999, GM acquired the complete stake in Hindustan Motors and General Motors India Pvt. Ltd. -GMIPL (GMI) became a wholly-owned subsidiary of GM. As of 2011, GMI held the fifth position in the country. On April 17, 2007, it launched its small car, the 'Chevrolet Spark', which intensified the price war in the small car segment.

Despite a major campaign and the media coverage, Spark failed to ignite GMI's fortunes, as due to capacity constraints, the Spark was offered initially only in the northern and western parts of the country. By the end of 2007, GM had recorded an annual growth of 68%, though capacity constraints still remained. To overcome the capacity constraints, the company built a facility at Talegaon in Maharashtra which became operational in 2009. As a result, the company not only overcame its capacity constraint but had excess production capacity. However, during 2010-2011, its production facilities in Gujarat were faced with labor unrest, which led to production losses. As the company faced these problems, industry observers feared that GMI may once again face capacity constraints. The case study can be ideally used for MBA/MS level courses as part of their Operations Management curriculum.

Issues:

» Understand the issues and challenges in capacity planning.
» Describe the determinants of effective capacity.
» Discuss the major considerations and approaches related to capacity planning.

Contents:

Keywords:

Capacity planning, Determinants of effective capacity, Production, Operations, Manufacturing, Demand and supply, Capacity constraints, Network expansion, Labor unrest, Strategy, Business level strategy, Emerging markets, Indian Automobile industry, Passenger car vehicle production, Chevrolet Spark, General Motors

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