Case study $1$: GENERAL MOTORS $($adapted from

GM$.$com$)$

Facts:

$1908$: Founded

$1982$: Built huge factory in Spain

$2009$: Filed for bankruptcy

$2010$: Emerged from bankruptcy

$2017$: $60\%$ of sales were outside the U$.$S$.$

In some respects, General Motors $($GM$)$ is the story of globalization. It was one of the most successful companies in the world in the $1960$s under the gifted manager Alfred Sloan. As it expanded globally, some of the jobs that had gone to Americans were moved overseas, partly to be closer to where vehicles were sold but also to cut costs. Gasoline prices increased sharply during the $1970$s and many Americans turned away from GM products and bought cars from Toyota, Honda, or Nissan. Americans were interested in the smaller, high$-$quality cars built by the Japanese. The weakened state of GM and the financial crisis of $2008-2010$ forced the company to file for bankruptcy in $2009,$ when the U$.$S$.$ government stepped in to help. But the company has since recovered. Jerry Smith worked at GM for several years and has a background in statistics. Among other things, he studies data such as that shown in the following two figures and develops equations to forecast demand.

a$,$ What can you learn from the two figures?

b$,$ Many factors are involved in making a forecast.

To illustrate, use the following equation to make a monthly forecast of car sales $($in thousands$)$ in one area given Advertising $=$$$6\mathrm{.}2($millions$),$ Economic Growth $=2\mathrm{.}8\%,$ and Level of Competition $=0\mathrm{.}6.$

Sales $=34\mathrm{.}8+5\mathrm{.}3**$ Advertising $+485**$ Economic Growth $-34\mathrm{.}2**$ Level of Competition c$,$ GM has responded to increasing competition, and rapid economic growth in China by building and selling cars in China. The strategy has worked for GM$,$ since China is now its largest market. Forecast monthly GM sales in one region of China using the following