Business strategy concepts and frameworks

General Motors Defense (GMD) must decide if they will bid completely on their own for a contract with the U.S. Army for a medium-weight armored vehicle that is referred to in the case as part of the Brigade Combat Team (BCT) program, or initiate a joint venture with General Dynamics (GD). There is also the option of initiating a joint venture with United Defense (UD), a privately-held, smaller defense contractor that has significant political clout in the U.S. Department of Defense (DoD) procurement process. The decision to initiate a joint venture (JV) with either company or complete the proposal on their own forces GMD to thoroughly evaluate the alternatives and define the relative risks and rewards of each, all within an accelerated time schedule as General Shinseki wants to award the contract in 11 months. The SWOT analysis that follows has as its basis the development of a joint venture strategy with either GD or UD, in addition to the option of proposing that the project be handled entirely by GMD.

Strengths, Weaknesses, Opportunities & Threats (SWOT) Analysis

Strengths

Extensive expertise in producing heavier armored vehicles that required intensive integration of electronics and weaponry systems; GMD has expertise in this area and is well respected for electronics and weaponry systems integration as a result. GMD is well-known for their ability to produce quality armored vehicles and turrets as well.

GMDs' core competency is in producing lighter-weight chassis truck bodies and has extensive experience in cross-over SUV design as evidenced by the breadth of their divisions as part of the broader GM family of vehicles. This would alleviate the problems the Army has had with their vehicles getting stuck on inadequate roads, as was the case in Bosnia, Haiti, the Gulf war and Kosovo.

Industry-leading project management of defense projects as evidenced by the production of the light armored vehicle (LAV) and Piranha classes of fighting vehicles in the past.

World class production and vehicle testing facilities which are more comprehensive than any competitor including GD or UD.

Extensive experience with replacement and swap-out parts design strategies to minimize the number of unique parts per vehicle, which is a major concern for the U.S. Army. One of the key lessons learned from the Gulf War was the need for minimizing the number of unique parts per vehicle, as this significantly slowed down the supply chain for replacement parts.

Fuel efficiency is a critical requirement for the U.S. Army as part of the BCT program. GMD has the potential of hitting a higher MPG target compared to another other competitor in the bidding due to their extensive vertical integration with other GM divisions.

GMD is capable of producing multiple variations of vehicles relatively quickly as is evidenced by their success with the 1982 U.S. Marines Program that required 8x8 configurations. The 8x8 configuration is in fact a differentiator for GMD and is potentially a reason to not partner with GD, as this technology needs to be kept proprietary.

Weaknesses

If GMD chooses to go it alone, the company risks losing solely due to not having enough political clout to sway the deal in their direction through Department of Defense procurement.

To date, weaponry systems themselves have been obtained through JVs and a series of acquisitions; this is an area outside of GMDs' core competence and a result this could impact how the U.S. Army and the DoD view them.

Lack of electronics vertical integration to the extend that GD has. GD has divisions that four on combat systems, aerospace, information systems and technology, and marine. GD is known for its expertise in systems and software development in weaponry systems management.

General Dynamics Land System (GDLS) is a formidable competitor and is based on the acquisition in 1982 of Chrysler Corporations defense operations. In addition, GDLS has been consistently acquiring electronics companies with expertise in weaponry systems integration and management to further the strength of GDLS' integration to core GD business units.

Opportunities

Acquire electronics companies with expertise in weapons systems integration and management to further make GMD as vertically integrated as GD.

Create a more aggressive lobbying team in Washington D.C. And open up a regional headquarters there to concentrate on government business, thereby increasing the influence GMD has on DoD contracts.

Develop a series of prototype vehicles that match the requirements of the BCT program with the 8x8 configuration and continually refine their MPG ratings to show high levels of fuel economy. In other words accelerate the development of this light armored vehicle as many other nations would want a variation of it, and provide the U.S. Army a prototype before the end of the bidding period. Build in on speculation of the win to show that GMD can conclusively develop the needed vehicle. Even if the contract is not won, GMD will have won credibility from the U.S. Army and the DoD, and second, opened up a significant secondary market.

Underscore the low total cost of ownership (TCO) for the proposed vehicle and also stress the high percentage of shared parts with other GM vehicles. Show the DoD that the supply chain and cost of maintenance - in short the TCO is overwhelming low relative to other competitors.

Threats

GD will most likely attempt to kill the project if GMD decides to bid it on its own entirely.

Completing a joint venture with UD is politically astute yet the company does not seem to have enough expertise and depth of experience in weaponry systems integration, production of light vehicles, or production to be of significant value in a JV.