Us Auto

Success in business is measured by the ability to make the right decisions, especially when it involves the life or death of an organization. Making the right decision however is not a simple task. One of the effective tools that help reach the best possible solution is the nine step problem solving model. This paper is about two major automobile companies that each struggles to achieve its desired end state goal.

US Auto: An American based company that despite its foreseen financial problems has strong goals like maintaining its presence in the domestic market and even expanding its business to explore the central and south American markets by maintaining technology leadership in critical areas of the automobile manufacturing; Although, US Auto realizes that cutting its labor cost is the only way out.

Auto Mex: A Mexican based company that has built a reputation for itself marketing US new and used autos for over three decades with even stronger goals such as developing competency in key auto manufacturing technology through maintenance of its presence in both central and south American markets as well as keeping the lowest labor cost in automobile manufacturing. But with no product of its own to offer, Auto Mex has no chance.

Both companies got together to discuss the possibility of a joint business. With an offer and a counter offer on the negotiation table, the 9 step problem solving model was the lead to the middle ground where both companies will be able to reach an agreement.

Team B is in consensus that decisions are made hastily in our personal lives. We make decisions daily and we are unaware that the 9-step problem solving model method is in use. However, the 9-step model has proven to be an effective tool to assist with solving personal and professional dilemmas.

The reason the model was so effective in the case of the USAuto-AutoMex scenario was because the decision makers of each company structured their concerns for each step within the model. Linda Henderson, EVP, USAuto was able to realized their challenges and opportunities, both internal and external, as well as categorizing the pros and cons of forming a partnership with AutoMex. Executives are judged and rewarded according to their ability to achieve results and that means making decisions under pressure in the face of uncertainty (Rijamampiania, Wallace 2005).

The problem-solving model in this case was used so that all possible questions were addressed before the meeting with AutoMex. The model assisted USAuto with identifying each department that would have a sufficient impact on the production of the engine. The decision makers were able to identify cost and effective methods that would be profitable to both organizations. As a result, the real problems for USAuto and AutoMex were identified.

Reference

Rijamampiania R., Wallace, E. (2005). Strategic Decision Making with Corporate

Emotional Intelligence. Problems & Perspectives in Management; Issue 3.

(abstract). Retrieved December 22, 2005 from EBSCOhost.

Both USAuto and AutoMex have clear goals to meet. USAuto desires to lower its labor cost while maintaining its competitive advantage with its hybrid engine. AutoMex wants to manufacture its own product while improving the knowledge and skill sets of its labor force. It would seem a partnership between these two companies would be ideal. The nine-step problem solving model is a relevant tool in this scenario because it causes one to focus on the in-depth concerns of both companies. There are external and internal challenges for both USAuto and AutoMex.

For USAuto, internal challenges are represented by the reality that the hybrid engine is their primary hope for continued sustainment. USAuto recognizes this technology is at risk if this company partners with AutoMex. "When a product enters international trade, it loses the protection granted by the government in the country of origin, and the owner must apply to the government of the market country for protection" (Sood and Miller, 1996, p. 244). Also, USAuto relies on brand loyalty in the short term. Additionally, the cost of labor is high in the US market because of labor contracts. Externally, the challenges are from foreign automakers who have already established manufacturing plants in the United States. Because U.S. labor is cheaper for these automakers, the cost per vehicle is lower for these foreign competitors.

For AutoMex, the internal challenge is that it relies heavily on its low labor costs. An external challenge is any foreign automaker could decide to manufacture in Central or South America. If this happens, AutoMex's appeal as a low cost provider of labor goes away due to the foreign carmakers technological advances, using robots and other state-of-the-art equipment to eliminate labor costs. For this company to survive and grow, technology investment is required since it is only a reseller of vehicles at the present time. According to a World Bank study:

The North American Free Trade Agreement (NAFTA) has spurred economic development in Mexico, but is not enough to achieve economic convergence with Canada and the United States, even in the long run without investment in innovation, infrastructure and adequate institutions (World