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Case of Gm (Non-Market Environment)

In: Business and Management

Submitted By cassiusls
Words 1582
Pages 7
Question 1: Identify and explain the 4l’s based on the case.
a. Issues
The dispute over the safety of the pickup trucks, vehicle safety and defective design
Firstly, the root cause is that the GM company has a unreasonable design of their gas tank on the collisions GM C/K pickups, the report shows that this pickups’ gas tank was too close with the bumper, it only 25 centimeters long. This is dangerous because that will cause explosions if there is any strike. A safety design should be place the gas tank on the top of axle or add on a shield between the gas tank and bumper. Further, the report also shows that the gas tank design was used for trucks manufactured between 1979 and 1987, and the fact is GM knows about their design problem but take no measure to fix or recall their cars because that will cause more cost.
At the Moseley case happens, there are at least 130 other lawsuits involving the design of the gas tank GM need to faced. So the major issue of this case in this point is that whether the gas tank design and placement were defective and because that explosion case after their pickup was struck on the side by another vehicle. And those assumptions were proved by the GM engineer who is testified that GM company hidden the knowledge of this dangerous safety defect, but GM try to block his testimony because they had known for years and refused correct it for fear of alerting the public. Moreover, the provided videotapes of GM’s own crash tests between 1981 and 1983 showed that it’s truly dangerous when the pickup was stuck on the side by another vehicle its gas tank broke open.

b. Interest
Car buyers, Medias and the other car manufactory like Ford and Dodge.
As we know, this case is a famous nonmarket environment case. And one of the important factors that changes in the nonmarket environment is interest group activity. After the Moseley case, the car buyer more cares about the safety of pickups and are pickups inherently more dangerous than smaller vehicles and the car buys as the consumer, they also care if they may get compensation after the accident cause by defective car design.
As for the news media, we have the knowledge of the NBC versus GM, after the accident happened, there is a good story for the NBC, which is a highly critical Dateline story, and as the result, this story was aired nearly three months ago, therefore GM also expresses concerns to NBC about the fairness, they thought in this accident, their design was not the main cause of explosions, the deadly reason is the slammed by another car. But that’s obviously accepted by public.
From the data showed by NHTSA, besides GM, Ford or Dodge also have similar problem although they are using the different design, this case also impact to them for developing their safety standards.
In fact, day after GM press conference, NBC news made an embarrassing retraction not disputing GM’s facts. Last, NBC established the position of ombudsman for professional standards and program review, also the dateline senior and executive producers resigned, and Michelle Gillen was reassigned to Miami.

c. Institution
NHTSA (The National Highway Traffic Safety Administration)
The NHTSA recorded data shows that they do not control for how the vehicles were used, which could affect the frequency with which they were involved in accident. Once NHTSA has asked GM to recall the pickups because their gas tank design, but GM maintains they are safe refuse to recall the trucks.
The pickup owners were seeking to force GM to make the gas tanks less dangerous to compensate all pickup owners for either the cost of repairs or the resale value they lost because of the defect. But the fact is that GM hasn’t set aside any money to cover the cost of the program and doesn’t expect to take a special charge.
As we know about in 1999, finally the GM being sentenced to pay 1.9 billion as compensation for the 1993 accident, it is a success for judging their defective gas tank design, but still GM doesn’t recall their productions.
Finally, GM’s interpretation was that there was internal disagreement within NHTSA and/or lack of support from the department of Justice, and there are no recall but GM agreed to spend 51 million on safety programs including buying 200,000 child safety seats for low-income families.

d. Information
Superior information
GM has superior information about the crash test between 1981 and 1983. But that’s hidden until the GM engineer discourser those test.
The alternative choice for GM at that time may be admit that their defective design will cause the explosion if slammed, but they won’t, if GM admitted, means that they were make a big mistake and that is a life threatening problem, and lead to recall all of their pickups between 1981 and 1983, further, they would suffer a large amount of fund to correct it and make a settlement of claims, it’s unaccepted for the management of GM at that time.
Look back to NBC, they don’t have general information for the whole affairs, but come out the Dateline program, the presentations includes: human tragedy, controversy and conflict like Ditlow, trial attorneys and experts, visual and vivid, demonstration of crash and fire which is based on NBC’s proof, protector of people’s right to know. But ended public is ignorant what is actually conclude from Dateline, the audience which means the consumers, people are more likely to see whether there is any compensations for them, and how GM response to this affair.

Q2: Discuss the roles of news media in the business environment
We are mentioned that this case is a nonmarket environment issue, nonmarket issues are often incompletely-formed and thus their development can be affected by managers (particularly early in the issue life-cycle), but they become much more difficult in the eye of the media. And the news media here in this case is NBC, and it comes out the dateline program and brings troubles to GM. For the GM, they were luckily, because it is really hard to beat the news media.
The news media plays a significant role not just in society but also the nonmarket environment. In society the news media is there to give information to the public about anything that is affecting people’s lives and the society we live in. The role the media has in the nonmarket environment is also very important, by identifying issues and placing them on the agendas of firms. The media is a good way to:
1. Alert the public, activists, interest groups, and government officeholders to nonmarket issues.
2. Raise concerns about the policies and practices of firms.
3. Provide information about the likely effects of alternative courses of action.
4. Reduce the costs of collective nonmarket action.
5. Enhance a nonmarket strategy by conveying information provided by an interest group.
6. Represent certain interests and principals consistent with the news media’s perception of its role in society.
In general, the news media is a very resourceful way to get messages across to the public, whether it’s to bring attention to a certain issue or a resolution for a previous issue.
The media cannot be “used” as part of a strategy, but, its decisions about coverage and treatment can be anticipated--theory of the media--and activists and interest groups choose strategies anticipating the media’s decisions.
But there is a big problem on this area about this case, NBC uses their own ‘proof’ to proven that the explosion is caused by GM’s defective design. They hired a consultant and set up a test on a rural road in Indiana. They rigged two GM trucks with rock engines – “igniters” to throw out sparks – and pushed old cars from the top of a hill into them. The first time a small fire resulted, the second time nothing happened. An exaggerated video of the first fire was used in the segment, but no disclosure was made of the rocket engines. The producers decided against disclosure because they were satisfied, as everyone who has looked at these videotapes has been – with the exception of GM – that the rocket engines had nothing to do with the explosion, the fire was started by the broken headlight.
But GM after beat back with testing that the fire was caused by sparks from the rocket engines and by a defective gas cap instead of a defective gas tank, and further they use x-rays show that there was no hole in the gas tank caused by the collision which will cause fires.
NBC as a news media wants protect people’s right to know about this affairs, but it’s fairly to maintain the truthfulness of the case, that makes the opposite effect, even final GM pay the compensations to consumers but still don’t means NBC wins the affair.

Reference:
1. The Non-Market Environment of Business. Retrieved on July 08, 2013 from https://www.msu.edu/course/ec/360/Matraves/ch1&2nonmktenv.htm
2. Sustainable Business Netweek (2013).Good news for business and the enviorment. VOL. 8
3. New York Law Journal (1993). Communications and Media Law- The Inside Edition of ‘GM v.NBC’. VOL.4
4. Elizabeth Kolbert(1993). NBC Settles Truck Crash Lawsuit, Saying Test was ‘Inappropriate’. The New York Times, Feb 10,1993.

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