As the automobile industry made its first appearance in the early 1900s, General Motors had already slowly begun its formation. GM was founded in 1908 by William C. Durant, a carriage manufacturer of Flint, Michigan, and today operates manufacturing and assembly plants and distribution centers in many countries, including Canada . Its major products include automobiles and trucks, a wide range of automotive components, engines, and defense and aerospace materiel. General Motors has a long history of business and technological innovation designed to deliver ever-increasing value to their customers and society. GM today has manufacturing operations in more than 30 countries and its vehicles are sold in about 200 countries.
General motors in on the of the biggest auto makers in the United States. It holds about one percent of the United States employment. The company which sold over 219,000 vehicles in November of last year only was able to sell 155,000 cars and truck to the American Public declining 41 percent compared to last year. GM car sales of 58,786 were off 44 percent and truck sales of 96,091 were down 39 percent. The steep decline in vehicle sales was largely due to a significant drop in the market’s retail demand compared with last year, and continuing economic uncertainty that has affected consumer confidence. The market shares for General Motors have always been low, but recently it has plunged to a 20 percent starting from 1980. I have included a graph which shows the decline in all of auto industry.
Ford Industry Analysis The automobile industry began with Henry Ford’s production of the Model T in the early 1900’s. With the creation of the assembly line, cars became cheaper and quicker to produce, thus making them affordable for many people. There were originally 500 auto manufacturers. By 1908, there were only 200; and in 1917 only 23 remained. This vast reduction was due to large amounts of consolidation within the industry.
US automobile industry began at the end of the 1800’s and by the 1890’s one out of seven jobs and one out of six businesses owed their existence to the automobile. Also this industry was the largest single customer for many raw materials but now With analysts debating whether or not the American economy is already in a recession, the big three automakers in the US especially General Motors are sharply scaling back production. The facts described by Danny Hakim in an article (G.M. Sees a Loss Near $1 Billion; Stock Falls 14%) published in NYtimes on March 17, 2005 say that announcement by GM about losses of almost a billion dollars for last six month dropped its share to the lowest level in more than a decade. Also it is considered to be ever biggest single day loss since 1987, as GM’s share lost 35 points on Dow Jones. GM once considered as strongest among big three is now way behind in the race with the plans to cut off 10% production of cars in North America. Investors have lost their confidence in GM. Market researchers and analysts are also waving red flags. Main reasons for GM crisis are crucial home industry and increasing health care cost, as company is providing health coverage to almost 1.1 million people in America. Despite all these facts, company’s chief executive Mr. Wagoner has neither yet announced any serious plans to overcome this situation nor has he shown any intention to change their corporate strategy.
Their chapter 11 petition was filed in the federal court in Manhattan, New York and “according to GM 's bankruptcy filing, the company has assets of $82.3 billion, and liabilities of $172.81 billion. That would make GM the fourth largest U.S. bankruptcy on record, according to Bankruptcydata.com” (CNN Money). Just to put into prospective how gargantuan this company was at the time, “until 2008, when it was overtaken by Toyota, GM was the world 's biggest carmaker, producing well over 9m cars and trucks a year in 34 different countries. It has 463 subsidiaries and employs 234,500 people, 91,000 of them in America, where it also provides health-care and pension benefits for 493,000 retired workers. In America alone, it spends $50 billion a year buying parts and services from a network of 11,500 vendors and pays $476m in salaries each month”(The Economist), so it is easy to understand by looking at that data that the fallout of this company failing would have been astronomical on the already depressed economy.
General Motors, the world’s largest vehicle manufacturer took the industry leadership from Ford Motors Company in 1931. With its customer oriented objective and significant marketing programs, GM protected its position since then.
Overall, General Motors has had five profitable years with increasing sales during the same period. GM has also paid a fixed dividend to its shareholders over the same period. The one-year, which was below average for GM, was 1998. During this period, GM was restructuring its top management and operations and also incurred a union strike of 54 days. However, GM did return to better performance in 1999 and 2000. GM overall was able to attain a fixed dividend of $2.00 per share and increase the shareholders value over the past five years.
I first see signs of GM’s impending financial stress through financial information in 2005. Although revenues remained constant at 2005 compared with 2004, the expenses increased drastically and caused the net income to change from positive to negative. The stockholders’ equity decreased by 47% as well, and the cash flow from operations was a huge deficit. Those awful performances in finance and operation also imposed a significant negative influence on stock price of GM. In 2005, annual high, low and closing stock price all decreased by more than $10. These indicators demonstrated that GM faced severe financial difficulties. Sales could not cover the high expense, and the negative cash flow could not meet its obligations.
GM should continue to use its technological advantages to create innovative automobiles, but do so cautiously. GM should follow the direction of today’s environmentally conscious consumers who want less expensive, economical automobiles. GM should primarily utilize a cooperative game-theory approach in its sales and marketing strategies in order to stay in sync with the current automotive industry needs.
This was a specific goal for the organization. Since GM specified, they would lower the number of platforms the company uses to manufacture automobiles. The second SMART goal GM uses is target dates because GM establishes the timeframe in which they want this action to be completed by. GM set the deadlines between 2014 and 2018 to have the number of platforms reduced to 24 and 14 by the year 2014 and 2018 (Lee, 2010). I think that these goals can be attained for GM with the right strategy in place. Because the Ford Company is projected to use only 5 platforms to make 75% of their cars and Ford is already making $300 more than GM per vehicle sold (Kinicki, 2013). So if this strategy will work for the Ford Company, I think it will work for GM as