GM WirelessGM WirelessCase #5 page: 141Case #5 page: 141

Anthony PembertonAnthony Pemberton

Daisaku OkadaDaisaku Okada

Bryan GauthreauxBryan Gauthreaux

Kendra PlattKendra Platt

Ryan PlattRyan Platt

Jordan ThompsonJordan Thompson

Company BackgroundCompany Background General Motors Corp. (NYSE: GM), the General Motors Corp. (NYSE: GM), the

world's largest vehicle manufacturer, world's largest vehicle manufacturer, employs about 325,000 people globally. employs about 325,000 people globally. Founded in 1908, GM has been the Founded in 1908, GM has been the global automotive sales leader since global automotive sales leader since 1931. GM today has manufacturing 1931. GM today has manufacturing operations in 32 countries and its operations in 32 countries and its vehicles are sold in 192 countries. In vehicles are sold in 192 countries. In 2003, GM sold nearly 8.6 million cars 2003, GM sold nearly 8.6 million cars and trucks, about 15 percent of the and trucks, about 15 percent of the global vehicle market. GM's global global vehicle market. GM's global headquarters are at the GM headquarters are at the GM Renaissance Center in Detroit. Renaissance Center in Detroit.

Products and ServicesProducts and Services ChevyChevy PontiacPontiac OldsmobileOldsmobile CadillacCadillac BuickBuick GMCGMC SaturnSaturn

HummerHummer SAABSAAB OPELOPEL Financial ServicesFinancial Services DirectTVDirectTV DirectPCDirectPC XM Satellite RadioXM Satellite Radio

AdministrationAdministration

CEO- CEO- G. Richard G. Richard Wagoner, Jr.Wagoner, Jr.

How was it done?How was it done?

A 30-person task force drawn from A 30-person task force drawn from different organizational divisions but different organizational divisions but headed by CIO. the task force worked headed by CIO. the task force worked for 60 days. for 60 days.

Tens of millions of dollars - Nothing is Tens of millions of dollars - Nothing is small at GM! GM is reported to have small at GM! GM is reported to have invested 1.7 billion on Internet invested 1.7 billion on Internet applications during the past five applications during the past five years. years.

GM Market Share GM Market Share (Domestic)(Domestic)

19961996 19971997 19981998 19991999 20002000 20012001 20022002

CarsCars 32.70%32.70% 32.40%32.40% 30.00%30.00% 29.80%29.80% 28.60%28.60% 26.90%26.90% 25.40%25.40%

TrucksTrucks 29.00%29.00% 28.80%28.80% 27.60%27.60% 27.80%27.80% 27.00%27.00% 29.20%29.20% 31.00%31.00%

Market Share

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

1996 1997 1998 1999 2000 2001 2002

Cars

Trucks

GM Sales DeliveriesGM Sales Deliveries (Source from GM.com; Sales and Production)(Source from GM.com; Sales and Production)

20022002 20032003Rate Rate ChangeChange   

Car TotalCar Total    2,069,206 2,069,206 1,960,682 1,960,682 -5.24%-5.24%   

Truck TotalTruck Total    2,789,500 2,789,500 2,795,721 2,795,721 0.22%0.22%

Vehicle TotalVehicle Total    4,858,706 4,858,706 4,756,403 4,756,403 -2.11%-2.11%   

Sales

0

50,000

100,000

150,000

200,000

1997 1998 1999 2000 2001 2002

GM Net Sales & Net IncomeGM Net Sales & Net Income

19971997 19981998 19991999 20002000 20012001 20022002

Net SalesNet Sales $172,580 $172,580 $155,445 $155,445 $176,558 $176,558 $184,632 $184,632 $177,260 $177,260 $186,763 $186,763 (billion)(billion)

Net IncomeNet Income $6,002 $6,002 $2,956 $2,956 $6,002 $6,002 $4,452 $4,452 $601 $601 $1,736 $1,736 (billion)(billion)

Net Income (in billions)

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

1997 1998 1999 2000 2001 2002

Net Income

Wireless networking refers to Wireless networking refers to technology that enables two or more technology that enables two or more computers to communicate without computers to communicate without network cabling. network cabling.

Wireless networks are growing in Wireless networks are growing in popularity due to the emergence of popularity due to the emergence of cross-vendor industry standards such as cross-vendor industry standards such as 802.11b. 802.11b.

Wireless NetworkingWireless Networking

Wireless Networking ContinuedWireless Networking Continued GM has had a wireless GM has had a wireless

network for years but network for years but it consisted of a it consisted of a proprietary network of proprietary network of mixed devices that mixed devices that could not always could not always interoperate. interoperate.

A typical wireless A typical wireless network consists of a network consists of a router, firewall, and router, firewall, and multiple access multiple access points.points.

Wireless Networking Cont…Wireless Networking Cont… GM has installed access points throughout its facilities GM has installed access points throughout its facilities

allowing for communicating between inventory allowing for communicating between inventory systems, production systems, workers, and even fork-systems, production systems, workers, and even fork-lift drivers.lift drivers.

Access Points typically have an indoor range of 150-Access Points typically have an indoor range of 150-300 feet depending on the operating conditions. 300 feet depending on the operating conditions.

GM’s 802.11b access points, consisting mostly of Cisco GM’s 802.11b access points, consisting mostly of Cisco Aironet devices, communicate at a speed of 11 Mbps Aironet devices, communicate at a speed of 11 Mbps whenever possible. If signal strength or interference is whenever possible. If signal strength or interference is disrupting data the devices will drop back to lower disrupting data the devices will drop back to lower speeds. Though it may occasionally slow down, this speeds. Though it may occasionally slow down, this keeps the network stable and very reliable.keeps the network stable and very reliable.

Future ImplicationsFuture ImplicationsGM is dabbling in a wide range of GM is dabbling in a wide range of wireless projects. In offices in China, it has deployed wireless projects. In offices in China, it has deployed wireless LANs and uses wireless voice over Internet wireless LANs and uses wireless voice over Internet protocol (VoIP) phones to cut costs. Its factory floors protocol (VoIP) phones to cut costs. Its factory floors and some of its logistics operations use radio and some of its logistics operations use radio frequency identification (RFID) systems to track the frequency identification (RFID) systems to track the movement of pallets and bins. movement of pallets and bins.

Wireless Lan BenefitsWireless Lan Benefits Access to twenty-four hour corporate data Access to twenty-four hour corporate data

from anywhere within the plant gives business from anywhere within the plant gives business mangers the ability to make faster decisions mangers the ability to make faster decisions

Sales personnel can incorporate new Sales personnel can incorporate new information to customers which adds value to information to customers which adds value to the customer and the organizationthe customer and the organization

Communication quality is enhanced with Communication quality is enhanced with employees that can relay information employees that can relay information anywhere and everywhere – wireless lans anywhere and everywhere – wireless lans complement traditional wired lans. complement traditional wired lans.

Employee satisfaction is improved with Employee satisfaction is improved with flexibility to wireless abilities which lowers flexibility to wireless abilities which lowers employee turnoveremployee turnover

Work teams can create temporary peer to peer Work teams can create temporary peer to peer networks for high collaboration and document networks for high collaboration and document sharing sharing

Additional BenefitsAdditional Benefits Wireless networks are easy to set up providing Wireless networks are easy to set up providing

benefits in areas whereas wiring is difficult to benefits in areas whereas wiring is difficult to deploy.deploy.

Suitable for highly mobile workforces that Suitable for highly mobile workforces that require roaming access to network resources require roaming access to network resources such as warehouse employees in GM factories.such as warehouse employees in GM factories.

Wireless networks offer high performance and Wireless networks offer high performance and bandwidth to keep all your applications and bandwidth to keep all your applications and transactions running.transactions running.

Wireless networks are quickly installed, Wireless networks are quickly installed, provide flexibility, and are easily reconfigured.provide flexibility, and are easily reconfigured.

Very low incremental cost is required to add Very low incremental cost is required to add users to an existing WLAN network. users to an existing WLAN network.

ROI on the wireless project is expected to be ROI on the wireless project is expected to be less than one year.less than one year.

Disadvantages of Wireless LANDisadvantages of Wireless LAN Wireless adapters are more expensive than Wireless adapters are more expensive than

Ethernet adapters.Ethernet adapters. Wi-Fi can be difficult to set up initially. Trying Wi-Fi can be difficult to set up initially. Trying

to find the optimal location, setting to find the optimal location, setting configuration options, choices of devices, and configuration options, choices of devices, and encryption/security. encryption/security.

Speed can fluctuate significantly. Slower than Speed can fluctuate significantly. Slower than wired network.wired network.

Using radio waves for data transmission might Using radio waves for data transmission might interfere with other high-tech equipmentinterfere with other high-tech equipment

Proprietary solutions: slow standardization Proprietary solutions: slow standardization procedures lead to many proprietary solutions procedures lead to many proprietary solutions only working in an homogeneous environmentonly working in an homogeneous environment

3 main security issues:3 main security issues: 1:1: Incorrect or poor configuration. A lot Incorrect or poor configuration. A lot

of routers and access points come with of routers and access points come with a default password that is not changed a default password that is not changed allowing unauthorized access.allowing unauthorized access.

2:2: Wireless encryption protocol Wireless encryption protocol standards are undergoing constant standards are undergoing constant change and are subject to attacks.change and are subject to attacks.

3:3: Trojan software. Execution of Trojan software. Execution of programs, generally distributed by programs, generally distributed by email that appears to be a useful or email that appears to be a useful or humorous file but is in fact a virus. humorous file but is in fact a virus.

Authorization/PrivacyAuthorization/Privacy Networked computers should be maintained by a Networked computers should be maintained by a

network administrator to prevent ordinary users network administrator to prevent ordinary users from changing the system in ways that might leave from changing the system in ways that might leave the computers open to an attack. The problem of the computers open to an attack. The problem of authorization can already be seen by a number of authorization can already be seen by a number of companies that have installed wireless systems in companies that have installed wireless systems in their companies but left them open due to their companies but left them open due to practices by uneducated users.practices by uneducated users.

Due to the nature of wireless networking it is very Due to the nature of wireless networking it is very easy for other people to access the flow of easy for other people to access the flow of information along the network. Some current information along the network. Some current wireless network implementations, like 802.11b wireless network implementations, like 802.11b include a form of encryption called Wireless include a form of encryption called Wireless Encryption Protocol but this has been shown to be Encryption Protocol but this has been shown to be insecure. Current VPN (virtual private network) insecure. Current VPN (virtual private network) technologies like IPSec could be used to encrypt technologies like IPSec could be used to encrypt traffic between hosts on the network.traffic between hosts on the network.

Key CompetitorsKey Competitors(ranked by sales)(ranked by sales)

1.1. General MotorsGeneral Motors

2.2. Ford Ford

3.3. DaimlerChryslerDaimlerChrysler

4.4. ToyotaToyota

5.5. VolkswagenVolkswagen

6.6. NissanNissan

7.7. HondaHonda

Fortune 500 RankingsFortune 500 RankingsLargest U.S. CompaniesLargest U.S. Companies#2 - General Motors#2 - General Motors#4 - Ford#4 - Ford

ProfitsProfits#46 - General Motors#46 - General Motors#458 - Ford#458 - Ford

Market ValueMarket Value#85 - General Motors#85 - General Motors#126 -Ford#126 -Ford

GM’s Competitors’ GM’s Competitors’ Network SystemsNetwork Systems

Ford Motor Company uses wireless technology along its Ford Motor Company uses wireless technology along its assembly line and for its forklift drivers, especially in its assembly line and for its forklift drivers, especially in its Kentucky plant. Ford opted for wireless technology and it Kentucky plant. Ford opted for wireless technology and it has paid huge dividends. Average forklift mileage has has paid huge dividends. Average forklift mileage has been reduced by more than 10 percent. Some drivers been reduced by more than 10 percent. Some drivers report cutting their mileage by almost one half.report cutting their mileage by almost one half.

Nissan not only uses wireless technology in manufacturing Nissan not only uses wireless technology in manufacturing but it has wireless access installed at Infinity dealerships but it has wireless access installed at Infinity dealerships that salespersons can use to access Nissan's customer that salespersons can use to access Nissan's customer resource management information directly from the show resource management information directly from the show floor over two-way pagers.floor over two-way pagers.

Daimler, prior to 2001, used a paper docket and barcode Daimler, prior to 2001, used a paper docket and barcode scanning system to maintain a central record of the scanning system to maintain a central record of the whereabouts of vehicles and drivers throughout their whereabouts of vehicles and drivers throughout their plants. Daimler had such complex plants that wiring them plants. Daimler had such complex plants that wiring them would be nearly impossible and very expensive. Avaya was would be nearly impossible and very expensive. Avaya was contracted to install wireless capability for Daimler in late contracted to install wireless capability for Daimler in late 2001.2001.

#1. What is the business value #1. What is the business value of wireless LANs to GM?of wireless LANs to GM?

Wireless networks bring GM the Wireless networks bring GM the following advantages:following advantages:

Unification of the processes involved in Unification of the processes involved in manufacturing vehicles, lower costs, manufacturing vehicles, lower costs, more efficient workers, effective more efficient workers, effective communication, flexible work communication, flexible work environment, easy reconfiguration of environment, easy reconfiguration of plant/assembly line, ROI on the wireless plant/assembly line, ROI on the wireless project is expected to be less than one project is expected to be less than one year.year.

#2. What are the security vulnerabilities of #2. What are the security vulnerabilities of wireless LANs? Is GM taking appropriate wireless LANs? Is GM taking appropriate

security measures? What or why not?security measures? What or why not?

Wireless LANs are susceptible to Wireless LANs are susceptible to eavesdropping, hackers, disgruntled eavesdropping, hackers, disgruntled employees, internet trojans/viruses, and employees, internet trojans/viruses, and wireless encryption standards that are not wireless encryption standards that are not always fool proof.always fool proof.

GM is taking necessary steps to protect their GM is taking necessary steps to protect their network by taking part in setting new network by taking part in setting new wireless encryption standards, using wireless encryption standards, using directional antennas ($1000 each), VPNs, and directional antennas ($1000 each), VPNs, and Firewalls. GM is also using detailed site Firewalls. GM is also using detailed site surveys that look at all radio transmissions.surveys that look at all radio transmissions.

#3. What are some other possible business #3. What are some other possible business applications of wireless LANs? Evaluate the applications of wireless LANs? Evaluate the benefits and challenges of one of them to a benefits and challenges of one of them to a

large or small business.large or small business. Inventory – wireless connection to distributor or Inventory – wireless connection to distributor or

directly to manufacturer. Dealerships could easily directly to manufacturer. Dealerships could easily reorder vehicles.reorder vehicles.

Realtors could use wireless laptops to access listings Realtors could use wireless laptops to access listings while showing houses to clients. Benefits would while showing houses to clients. Benefits would include flexibility, enhanced customer service, fewer include flexibility, enhanced customer service, fewer miles to travel. Challengesmiles to travel. Challengessecurity, coverage, security, coverage, interference, viruses…interference, viruses…

Movies other entertainment venues could have Movies other entertainment venues could have Wireless capable chairs that allow customers to order Wireless capable chairs that allow customers to order concessions directly to their seats. concessions directly to their seats. AdvantagesAdvantagescustomer loyalty, convenience, customer loyalty, convenience, satisfaction. Disadvantagessatisfaction. Disadvantagesvulnerable to vulnerable to attacks/interference, careless customers (spills, attacks/interference, careless customers (spills, damage), and cost.damage), and cost.