general motors strategic mangement

27
STRATEGIC MANAGEMENT GENERAL MOTORS Submitted by: Mohammad Arif Submitted to: Sir Shoaib

Upload: arif-kk

Post on 15-Jul-2015

27.222 views

Category:

Education


4 download

TRANSCRIPT

GM Motors

0

STRATEGIC

MANAGEMENT

GENERAL MOTORS

Submitted by: Mohammad Arif

Submitted to: Sir Shoaib

GM Motors

1

STRATEGIC MANAGEMENT

Submission Date

14th September`12

Term Paper

‘’General Motors’’

ASSIGNED BY

Sir Shoaib

SUBMITTED BY

Mohammad Arif

GM Motors

2

TABLE OF CONTENTS

Pg. #

COMPANY INFORMATION .............................................................................................. 2

MISSION STATEMENT ...................................................................................................... 3

VISION STATEMENT ......................................................................................................... 3

BACKGROUND .................................................................................................................. 4

ORGANIZATIONAL CHART .............................................................................................. 5

KEY STRATEGIC DILEMMAS .......................................................................................... 6

FACTORS AFFECTING THE AUTOMOTIVE INDUSTRY .............................................. 8

DIVISION OF BRANDS OF GM ...................................................................................... 10

FINANCIALS .................................................................................................................... 11

COMPETITORS ................................................................................................................ 14

SWOT ANALYSIS .............................................................................................................. 16

STRENGTHS ........................................................................................................... 16

WEAKNESSES ........................................................................................................ 17

OPPORTUNITIES .................................................................................................. 18

THREATS ................................................................................................................ 19

PORTER’S FIVE-FORCES ANALYSIS ............................................................................ 20

CORE COMPETENCE ..................................................................................................... 23

FINANCIAL RESULTS ..................................................................................................... 23

SUGGESTED STRATEGIES ............................................................................................ 24

EVALUATION: ................................................................................................................. 25

GM Motors

3

COMPANY INFORMATION

General Motors Company (GM) designs, forms and trades cars, trucks

and automobile parts worldwide. The Company also delivers automotive

financing facilities through General Motors Financial Company, Inc. (GM

Financial). It operates in four automotive segments: GM North America

(GMNA), GM Europe (GME), GM International Operations (GMIO) and GM

South America (GMSA). GM's total worldwide vehicle sales were nine million

during the year ended December 31, 2011. The Company's GMNA segment

develops, manufactures and/or markets vehicles under the brands, such as

Buick, Cadillac, Chevrolet and GMC for its customers in North America. GM

for its customers outside North America develops, manufactures and/or markets

vehicles under the brands, such as Buick Chevrolet, GMC, Opel, Cadillac,

Daewoo, Holden and Vauxhall.

MISSION STATEMENT

General Motors is devoted to be a leader in providing transportation

products and services of such quality that its customers will receive superior

value, its employees and business partners will share their success and their

shareholders will receive a sustained return on their investment.

VISION STATEMENT

Our Vision is to design, build, and sell the world's best vehicles.

GM Motors

4

BACKGROUND

General Motors Corporation (GM) is a multinational automobile

manufacturer created in 1908.its headquarter is in the United States. GM is the

world's largest automaker as measured according to the global industry sales.

GM is the proud sales leader in the automotive industry for the last 77 years.

As of 2008, General Motors employs about 266,000 people around the

world. It manufactures its cars and trucks in 35 different countries. The famous

brands under the umbrella of GM are Buick, Cadillac, Chevrolet, GM Daewoo,

GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall, and Wuling. In

2008, General Motors was the ninth largest publicly traded company in the

world. In recent years the company has faced significant financial chaos,

including a 38 billion dollar loss in 2007.

From 1908 to 2005, it had grown expansively. But today its market share

has gone down and together, with challenges posed by economic conditions, in

the form of increasing healthcare costs and fuel costs and cut throat competition

GM is facing a tough time in maintaining its profits. GM is deriving its 100%

profits from financing cars and not from the sales of vehicles.

Internal factors that account for this decline are the failure of the

company to adapt to the changes in the environment such as the consumer

preferences and technology, lack of differentiation applied to products and lack

of effective cost leadership strategies to efficiently manage costs.

General Motors is one of America's biggest corporations. It would seem

to be very successful, but it is having problems today. A lot of large companies

are having troubles today along with small companies. The recession is one of

the reasons, but there are other reasons too. General Motors has a long history,

and during that time it has changed its management and its management style

several times. The way the company is administered has something to do with

the troubles it is having today. It is having so many troubles that it is closing

GM Motors

5

plants and firing people by the thousands. No one is sure if these measures will

make enough difference to save the company.

ORGANIZATIONAL CHART

GM Motors

6

KEY STRATEGIC DILEMMAS

• GM's Bankruptcy

General Motors is the biggest of the three, Ford Chrysler and GM motors

the ponderous American auto makers who have traditionally dominated the

North American market.

GM's bankruptcy has given greater impetus to this downsizing, calling

for closing another 14 factories and 2,400 dealerships, eliminating 29,000 jobs,

and canceling nearly $80 billion in debt. But GM's survival cannot be assured by

cost cuts and capital infusion forever. GM hopes that a few new hit products will

raise profits, and is refocusing on crossover-utility vehicles (CUVs) and sedans.

Product reviews have been positive so far. Still, it will be challenging for GM's

new models to capture attention when all of these three automotive industries

are using the same strategy and introducing their own new lineups.

• Automation Production

In the early 1980s another foreign competitor, the Japanese, exploded

onto the U.S. auto market, offering reliable, small, competitively priced cars.

The Japanese approach, which emphasized such unusual practices as just-in-

time inventory, quality management, painstaking attention to production

processes, extensive employee training and involvement, and close cooperation

with suppliers, generated productivity rates far in excess of anything Detroit

could muster and posed a real threat to the established order in automobiles. To

deal with the growing global assault and reestablish its domestic leadership, GM

unleashed a radical business plan to automate and modernize its factories as well

as its car models. It was not a subtle strategy—the centerpiece of the plan was to

substitute high-tech robotics for inefficient labor, relying on GM's huge financial

resources to make it all work.

GM Motors

7

• GM's Spending For Nothing

Though confidence remained high, productivity paybacks from GM's

factory automation spending seemed slower-than-expected right from the start.

Costs were rising at an alarming rate while market share and operating income

were starting to decline, a combination that might trigger warning bells in some

organizations. Internal GM reports indicated that by 1985 the Japanese cost

advantage had not changed after four years of intensive spending on automation.

The company that was founded on the principle of cost savings and was once the

prototype for efficiency had by 1986 become the auto industry's high cost

producer. The average number of autos produced by each GM employee stood

at 11.7, while the same metric at Ford was 16.1 and as high as 57.7 at Toyota.

GM also earned 38% less than Ford and 26% less than Toyota on each vehicle

they made.

• Automating GM (False Assumption)

The strategy to automate General Motors in the 1980s under Roger

Smith was predicated on a false assumption—that replacing people with

machines could turn back the Japanese attack and bring GM back to dominance

in the global auto industry. Rather than adopt the lean manufacturing techniques

that still define the Toyota production system today, a virtual obsession with

robotics took over. In some ways this was no different than the companies today

that jump on the latest fad without really understanding the underlying processes

and inter-relationships that make the whole thing work. That was certainly the

case with GM and automation in the 1980s. By not understanding how people

and machines could be effectively integrated, GM missed the essence of

Toyota's low-cost production success. Former Ford President Phil Benton put it

this way: "Automation would not make the list of major problems facing the

auto industry in the 1980s." Consistency of manufacture must come before

automation. Toyota is not as automated as Nissan, for example, but they are

more successful. "Everything goes back to management. What you need to do is

engineer the product to the skills of your work force."

GM Motors

8

• GM Board of Directors

While there was internal opposition, particularly among people who

understood that productivity is not just based on labor costs but on the entire

production system, the board of directors appears to have had little problem with

the strategy. Indeed, given the deteriorating state of GM labor relations and

productivity at the beginning of the 1980s, turning to the automation solution

may well have been considered reasonable. It didn't take long, however, for

problems to develop. Plant efficiency was down in many factories, productivity

improvements relative to the Japanese did not materialize, and traditional

metrics like stock price and market share reflected these problems. Further,

when a company spends some $45 billion on automated factories, it does not

write a single check for that amount and wait for delivery. Expenditures of this

magnitude involve thousands of checks written to vendors over a long time

period, with an opportunity to assess progress along the way. For example, in

1983 GM spent $6 billion for new technology and automation, increasing to $9

billion in 1984 and $10 billion in 1985. Even by 1985, when internal studies

were indicating little change in the productivity gap between GM and Toyota,

GM was still poised to spend more. Nevertheless, throughout this time the board

of directors continued to approve Roger Smith's plans and expenditures.

FACTORS AFFECTING THE AUTOMOTIVE INDUSTRY

1. Political

Laws and government regulations have affected this industry since the

1960s. Almost all of the regulations come from consumers increasing concerns

for the environment and the concern for safer automobiles.

2. Economic

The automobile industry has a huge impact on every country’s economy.

According to various studies this industry is the major user of computer chips,

textiles, aluminum, copper, steel, iron, lead, plastics, vinyl, and rubber. The

GM Motors

9

study also showed that for every autoworker there are seven other jobs created

in other industries. These industries include anything from the aluminums to

lead to vinyl.

3. Sociocultural

Today’s society judges people on the type of car you drive. Society does

not like to admit to this but it is very true. Manufactures know this happens and

targets their markets by these thoughts. Anyone who drives a nice vehicle is

thought to be wealthy. No one wants to be seen driving an unattractive piece of

junk because of what other people will think of him or her. Consumers also just

feel better when they are driving a nice or new car, if makes them feel better

about themselves.

4. Technology

The internet has affected just about every industry in the world and has

also had a huge impact on the automobile industry. A study was conducted by

J.D. Power and Associates in 2002 and involved more 27,000 new vehicle

buyers. The study showed that 60% of the buyers referred to the internet before

making their purchases and out of that 60%, 88% went to the auto websites

before going and taking a test drive. Business-to-business marketplaces have

given the industry many opportunities because of the internet, such as more

efficiency and lower cost.

5. Demographics

For many years now, the baby boomers generation has been the main

target market for just about every product. As their generation is getting ready to

retire and spend less money, the automakers are looking at the younger

generations. Right now, the focus is starting to turn towards the baby boomers

children (Generation X) who are in their mid-20 and 30’s. According to

Analysts, five years from now Gen X will account for at least 30% of vehicle

sales.

GM Motors

10

6. Global

General Motors, Ford Motor Company, Daimler Chrysler, BMW,

Volkswagen, Volvo, Toyota, Mazda, and Nissan Motor Company come together

to create a new trade association created the Alliance of Automobile

Manufacturers. The organization was to replace the American Automobile

Manufacturers Association that only consisted of American manufacturers, the

goals of the associations were to work together on public policy matters of

common interest to provide credible industry information and data, and seek

consistent global regulatory standards

DIVISION OF BRANDS OF GM

GM's cars are sold under a number of different brands and marque. As

grouped by primary region of distribution:

North America: Buick, Cadillac, Chevrolet, GMC

Europe: Corvette (as standalone brand), Opel, Vauxhall

Asia/Pacific: Buick, Daewoo, Holden, Wuling (joint venture)

GM Motors

11

FINANCIALS

Income Statement

GM Motors

12

Balance Sheet

GM Motors

13

Cash Flow

Fundamentals

GM Motors

14

COMPETITORS

The major competitors of General Motors are domestic companies like

Damiler Chrysler & Ford Motor and foreign companies like Toyota Motor &

Honda Motor.

Damiler Chrysler

As the number two auto manufacturer in total revenues DaimlerChrysler

has positioned itself as an industry leader, with this come many strengths. The

DaimlerChrysler umbrella covers many well-known brands such as Dodge,

Chrysler, Mercedes Benz, and Jeep. This means DaimlerChrysler has strong

brands that are recognizable in almost every part of the world.

Ford Motor Company

Ford Motor Company is a global company with two core businesses:

Automotive and Financial Services. The Automotive business consists of the

design, development, and manufacture, sale and service of cars, trucks and

service parts. Ford has been focusing on cutting costs to increase margins more

GM Motors

15

than its competitors. It has used reverse engineering in the development of their

products. Thus Ford has been an innovator in the auto industry.

Honda Motor Company

Honda motor company is not your average Japanese car manufacturer.

Originally known for motorcycles, Honda has managed to elude the dominate

keiretsu system in Japan and become one of the dominant automobile

manufactures in the world. There is much strength to Honda. Honda has a

reputation for producing high quality products from cars to motorcycles. Honda

has won many awards for initial quality and customer satisfaction. Their

automobiles are reliable and generally fuel efficient. Their research has afforded

them competitiveness in innovative products.

Toyota Motor Corporation

The Toyota Motor Corporation was incorporated in 1937 and has many

strengths being one of the industry leaders in the automotive industry. Toyota

has three major brands underneath the company umbrella; Toyota, Lexus, and

Scion. By having these three distinct brands, it lets the company reach many

sectors of the globe in a choice of vehicle for customers. Toyota has traditionally

also been the leader in Total Quality Management or TQM. By using the Kaizen

theory of continuous improvement, Japan caught up the U.S. auto makers during

the 1980s.

GM Motors

16

SWOT ANALYSIS

STRENGTHS

1. Large Market Share

Although GM's market share in the US has dropped it is still very much

competitive at 26 percent. They also have an increasing share in the Chinese

market. With the right decisions there is no reason for GM to not become the

automotive leader it once was.

2. Global Experience

As explained above even with GM's recent decline they still have the

market share and the experience to bounce back. They have been a worldwide

company for nearly a century now and have established themselves as the global

leader for most of them. If you recall I mentioned above that a current

opportunity for GM is to expand globally and as we can see they already have

the experience to do so. It is just a matter of the correct planning and proper

implementation of those plans that will decided whether or not GM's goals are

achieved.

3. Variety of Brand Names

GM as I mentioned has been the automotive leader for the majority of

the last century. A large reason for that is the wide variety of quality brand

names that appeal to all target markets. The current GM brands include:

Chevrolet, GMC, Cadillac, Buick, Pontiac, Saturn, Hummer, Saab, Daewoo,

Opel, and Holden.

4. GMAC Customer Financing Program

Since its establishment in 1919 it has proven to be GM's most reliable

source of revenue.

GM Motors

17

5. OnStar Satellite Technology

Developed in 1996 OnStar currently has over 3 million subscribers and

is standard on all GM vehicles. This technology allows the vehicles to be

tracked in the event of an emergency or theft. It also allows the driver and or

passengers the ability to communicate with OnStar personnel at the click of a

button.

WEAKNESSES

1. Behind on Alternative Energy Movement

This is GM's biggest weakness. The alternative energy/hybrid trend has

begun to take place in the automotive industry and GM has been one step behind

the competition in terms of alternative energy vehicles. This has led to many

problems including loss of market share and a decrease in company profit. In

order for any automotive company to be successful from this point forward they

must be Hybrid friendly and fuel efficient.

2. Poor Organizational Structure

GM's organizational structure seems to be too vertically integrated. This

causes a lack of communication between employees from top to bottom and may

have played a part in GM falling behind on the alternative energy movement.

3. Stagnant Profitability

Looking at GM's profit we see that they are certainly struggling with

respect to the size of their company. Their profit margin was about 1.5% and the

ROE has dramatically decreased over the recent years dropping to 10% in 2004.

This is a situation that shareholders will not be pleased with.

GM Motors

18

4. Overly Dependent on US market

GM has become too dependent on the US market and must take

advantage of the opportunity to expand globally. The competition is becoming

too strong to focus on just one country.

5. Overly Dependent on General Motors Acceptance Corporation (GMAC)

Financing

GM has become too dependent on its financing program. Granted it is a

great strength for GM, however they once again cannot rely solely on financing

in order to turn profit, especially if they want to compete with Honda and

Toyota who are rapidly growing.

6. Poor Credit Status

GM's financial status has like everything else has been gradually

decreasing. Their current ratio is just barely above 1 and their asset test is even

lower. Although, I don't see them getting denied based on their credit at this

point, the seriousness of the matter is certainly apparent.

OPPORTUNITIES

1. Alternative Energy Movement

It is obvious that GM was behind its competition with regards to the

research and development of hybrid vehicles. However hybrid technology is still

very much new giving GM the opportunity to once again become the automotive

industry's leader in innovation and technology.

2. Continuing to Expand Globally.

Recently GM saw an increase in the Chinese automotive market, which

proves their needs to be more emphasis put on foreign markets. If GM can

infiltrate these markets and successfully grow along with their continuing focus

on the US market they will be headed in a positive direction.

GM Motors

19

3. Low Interest Rates

With the right marketing strategy the low interest rates have the potential

to generate an immediate increase in sales.

4. Develop New Vehicle Styles and Models

This is an opportunity that will never be satisfied, meaning that GM

should always be attempting to develop the automotive world's most popular

vehicles, and as we know, what is in today will be out tomorrow.

THREATS

1. Rising Fuel Prices

With GM being a large producer in both trucks and SUV's, sales have

drastically decreased due to the lack of fuel efficiency. The rise in fuel prices

has played a significant role in creating the opportunity for development of both

hybrid and more fuel efficient vehicles. As you will find with most threats, an

equal opportunity will usually emerge as is the case here with GM's opportunity

mentioned above.

2. Growth of Competitors

GM no longer has the luxury of being the known leader in the

automotive industry and faces the reality that they are in serious trouble. As I

mentioned earlier Toyota took the first step in the direction of hybrid technology

and has since drastically grown and become the questionable automotive

frontrunner to start the 21st century.

3. Pension Payouts.

Part of this threat is their own doing and the other is simply unavoidable.

GM is responsible for providing generous pension benefits to its employees,

GM Motors

20

which at the time seemed like a great idea,however they are now experiencing

problems as more and more people begin to collect.

4. Increased Health Care Costs

GM, like many large companies with quality employee health care

benefits, is experiencing a large financial hit that only gets worse as time

continues.

5. Rising Supply Costs, i.e. Steel

Once again this threat affects the entire automotive industry and forces

each company to cut manufacturing and production costs as much as possible,

without taking away from the quality of the product.

PORTER’S FIVE-FORCES ANALYSIS

The competitive structure of an industry is another important component

of identifying factors that are a threat to diminish profitability. One of the most

efficient ways to assess competitive issues is to consider Michael Porter's five-

force analysis. Porter has highlighted five such factors:

(1) Rivalry between existing competitors,

(2) Threat of entry by new competitors,

(3) Price pressure from substitute or complementary products,

(4) Bargaining power of buyers, and

(5) Bargaining power of suppliers.

1. Rivalry between existing competitors

With the rise of foreign competitors like Toyota, Honda and Nissan in

the 1970's and 80's, rivalry in the American auto industry has become much

more intense. Firms compete on both prices and non-price dimensions. The

price competition erodes profits by drawing down price-cost margins while non-

GM Motors

21

price competition (e.g., new car rebates and interest free loans) drives up fixed

cost (new product development) and marginal cost (adding product features).

One of the other reasons there is such high rivalry is that there is a lack of

differentiation opportunities. All the companies make cars, trucks or SUVs. The

competitors are compared to one another constantly. In recent years there has

been significant market share variation, another indication of rivalry and its very

strong threat to profits.

2. Threat of entry by new competitors

The presence of new firms in an industry may force prices down and put

pressure on profits. There are, however, barriers to entry that tend to protect

established firms. One would expect the production of automobiles to require

significant economies of scale, an important barrier to entry. The new entrant

would have to achieve substantial market share to reach minimum efficient

scale, and if it does not, it may be at a significant cost disadvantage. While the

evidence suggests that economies of scale in the auto industry are substantial,

there are also indications that large size may not be as important as commonly

assumed. Nevertheless, entry would represent a large capital investment to any

new firm and the body of research still indicates that economies of scale

represent a substantial barrier to entry. Consequently, entry is currently a weak

threat to profitability.

3. Price pressure from substitute or complementary products

While five-forces do not directly consider demand, it does consider two

factors that influences demand ― substitutes and complements. Although new

cars generally are slightly price elastic, suggesting few real substitutes (e.g., bus

and rapid transit), the demand for a particular model is highly sensitive to price

because of the availability of close substitutes for a given model. A change in

the price of a complementary product (e.g., gasoline, batteries, and tires) could

have a significant impact on the demand for automobiles. The rising price of

gas, an important complementary product, is likely to affect some firms more

GM Motors

22

than others depending upon the vehicle composition. Recent rising fuel prices

are likely to have a greater impact on the big three (GM, Ford Motor and

Daimler-Chrysler) whose most profitable models are energy inefficient pick-up

trucks and sports utility vehicles. On balance, the overall impact on "industry"

profitability from substitutes and complements is weak to moderate.

4. Bargaining Power of Buyers

Buyer power refers to the ability of individual customers to negotiate

prices that extract profit from the seller. Individual consumers have some

influence over price within a given dealership, but little power over

manufacturers. Customers can easily, and with little cost, switch to other auto

dealers. Furthermore, customers now have access to market information (prices

and costs) from the Internet that enhances their negotiating power. But when

you have many individual customers, each representing a small proportion of

total sales, they will have little bargaining power with manufacturers and

therefore pose a weak threat to industry profit.

5. Bargaining Power of Suppliers

Auto manufacturers require inputs-labor, parts, raw materials and

services. The cost of these inputs can have a significant effect on profitability.

Whether the strength of suppliers is weak, moderate or strong depends on how

much bargaining power they can exert. The auto manufacturers have large

supplier networks that appear to exert little bargaining power. Nevertheless, the

United Auto Workers (UAW), the only supplier of labor, has historically exerted

a great deal of leverage over the benefits and wages provided by the big three.

Because of this historical dominance by the UAW and the uncertain results of

their current negotiations with the big three, one has to characterize supplier

power, at least in this segment of the American market, as a strong threat to

profits.

GM Motors

23

The following table summarizes the results of a five-force analysis of the

automobile industry.

CORE COMPETENCE

The core competence of General Motors is innovation. This is the

driving force behind its $190above turnover. General Motors has been utilizing

innovation in service ad technology to secure itself a dominant position in the

automobile industry, since 1908. In 1911, it conceptualized, engineered and

commercialized the self-starter engine for the first time. Then in 1926, its

product Cadillac was the pioneer in devising a nationwide service strategy. In

1996 General Motors introduced OnStar satellite technology which allows

equipped vehicles to be tracked in case of an emergency or theft and allows the

passengers to communicate with OnStar personnel. Other new car concepts

include mini cars such as Chevy Aveo. However in the case of hybrid vehicles,

General Motors was unable to keep up to the pace of the market demand.

FINANCIAL RESULTS

Based on the GM’s consolidate net sales and revenue, it shown that

General Motor Corporation revenue has been falling to $ 192.6 billion in 2007

from 193.5 billion in 2004. GM incurred a consolidated net loss in 2007 of $

10.6 billion, compared to net income of $ 2.8 billion in 2004.In the last 1990s,

GM had regained market share up $ 80 a share. In 2000, the interest went up by

the Federal Reserve to quell the stock market and a severe stock market decline

GM Motors

24

following the September 11, 2001 attacks. Due to this factor, it affected a

pension and benefit crisis at General motors and many other American

companies. The current stock market price of General Motors are falling

between $28- $29 per share. It has been falling down gradually in the past six

years.

General Motors North America market share in 2007 fell to 25.5%

compared to 26.7 in 2004.Decreased in market share also due to sales declines

in segment where GM has high volume such as large sport utilities, mid-sized

utilities, and mid-sized cars. The unfavorable results of GM’s consolidate net

loss in 2007 were driven primarily by losses at GMNA due largely to

unfavorable volume and product mix.

SUGGESTED STRATEGIES

Below is a list of possible strategies General Motors could use to redirect

profits and be able to maintain survival for the future.

1. Market Development

2. Market Penetration

3. Product Development

4. Restructuring

5. Retrenchment

6. Liquidation Implementations

Suggested policies for General Motors would initiate with improvement

in their product then market growth, liquidation, and restructuring. Reasons for

product improvement being at the top of priorities is that GM has to create a

type of Hybrid vehicle that will allow it to keep up with the pace of the

competitive environment, but must be a product that stands out from the crowd

at the same time. Prime example of their idea for a Hybrid SUV, it fits the GM

profile with maintaining the SUV portion, but allows the firm to stay with trend

patterns.GM must also re-evaluate the market they are trying to approach,

GM Motors

25

because for so long they have continued with a tradition outlook for

automobiles, but now that times are changing their original target market is not

looking for what they once were. General Motors needs to take a step back and

take look at how they want to position themselves and towards what market

since what they have been doing is no longer in favor for the company. An

example of what GM could possibly do is producing a futuristic vehicle, which

has been heard in rumors from Toyota about their next plan of action. If General

Motors could provide a "futuristic" vehicle before Toyota has the chance to hit

the market with theirs GM would be a step ahead of the competition. Economic

failure is important to GM because their possessions are a lot higher than

returns, and if GM may possibly try to convert their assets into cash then there

would be more readily available funds and then GM would not have to depend

some much on their U.S. sales, which only include 2/3 of that market and their

financing tactic wouldn't be as much of a risk. Liquidation would clearly help

out the financial parts of the organization. Last but not least is restructuring,

which General Motors most desperately needs to review possibilities. The

company has taken a large hit in recent years and needs to find a way back to the

top. This is only going to be achieved if something drastic is changed.

Restructuring the product development pace would be a start as well as cutting

back on employees because the company is growing in size but not in profit,

which causes a red flag for GM. The company needs to be re-evaluated in many

ways, but GM has been strong for many years that it is very possible for the

company to come above these issues.

EVALUATION:

The major thing for General Motors is to improve a Hybrid vehicle that

will keep the position in the competition for the company as well as to be

distinguished. Generating a Hybrid SUV is a brilliant idea and if GM can pull

that off by the end of 2012 the future could look very bright for them. The

company has a huge background proving that they can maintain being number

GM Motors

26

one, it's just a matter of product development being maintained and refocusing

products to the correct target markets.