Chrysler, LLC, Versus Plastech Engineered Products Inc.
Write 3–5 paragraphs on the Chrysler, LLC, Versus Plastech Engineered Products Inc. Vignette in Chapter 17. Address the following questions:
Question 1: Who is really at fault?
What I have observed from the details of the case in chapter 17 (Burt, Petcavage, Pinkerton & Burt, 2010), Chrysler might have hired the services of Plastech Engineering to supply the injection molded parts for the interior of the automobiles that Chrysler manufacture. This decision might have been made after a make or buy analysis. In my opinion the onus of burden is on Plastech, as they did not make a right analysis of the cost of the product that they promised they would produce on a certain price to Chrysler. They were bankrupt because they were not able to get the price of the product down to a certain desired level. Chrysler did not have a control on the internal operations of Plastech and hence they would not have been able to help in reducing or anticipating the price of the product.
Question 2: Could the legal issues between Chrysler and Plastech have been resolved in a more constructive manner without litigation?
I think that on the part of Chrysler, there should have been a more ethical approach than a legal one to resolve this situation. They are the big company. Of course, Plastech made a mistake in wrongly anticipating their cost on developing the product but Chrysler could focus on sitting together with Plastech and apply a cooperative negotiating solution where they might not be able to cooperate with Plastech and resolve the situation without litigation by providing financial help or renegotiating the price of the product to meet with the actual cost of the product.
Another point in the case study is about the Bailout package that both companies can negotiate to find an optimal solution for both the companies. Both these companies need to trust each other and focus on long term goals instead of simply focusing on short term profit and loss.
Question 3: How could this situation have been prevented?
In my opinion, the situation could have been prevented if Plastech had been more vigilant and had made accurate cost evaluation of the items they were planning to sell to Chrysler for their automobiles. They could have used different information resource to get a clear picture of the cost.
On the part of Chrysler, they should have also put some efforts to find out the actual cost of the product so that future complications could have been avoided. In my opinion, they agreed on the lowest price they could get to simply maximize their profit.