Evaluating the lifetime Strategies of General Motors Essay Example

for every purse and purpose."

GM began to adopt a new approach in order to stay ahead in the game. Instead of seeing vehicles as mere transportation, they started making bold statements and setting ambitious goals. As part of their global expansion, GM started constructing more factories outside of the United States. In 1927, the Cadillac LaSalle made a significant impact with its sleek design featuring crisp corners and a low, elongated stance - which differentiated it from the more boxy and tall Ford Model T. Additionally, GM acknowledged the importance of research and development (R;D) by establishing its own design studio led by Harley Earl until his retirement in 1959. Despite uncertainties faced by the automotive industry during political changes in Europe in the 1930s, GM persisted with their innovative practices.

In 1940, President Roosevelt appointed William Kundsen, the former President of GM, as Chairman of the new Wartime Office of Production Management. By 1942, GM focused its production on supporting the Allies' war effort and successfully provided over $12 billion worth of goods, such as airplanes, trucks, and armored combat vehicles. After World War II ended and the situation stabilized, industries experienced renewed hope as consumers eagerly sought goods that had been unavailable for a significant period. GM capitalized on this opportunity by introducing innovative designs with its inventions that continue to shape the industry today.

General Motors has introduced various significant features including front wheel suspension, unibody construction, and a one-piece steel roof. Both the Buick Roadmaster (1949) and Cadillac El Dorado (1959) were not only enjoyable to drive but also visually striking. Throughout the 60's and 70's, the industry faced several challenges such as

environmental concerns, increased gas prices, and intensified competition from foreign companies. In order to combat these issues, GM made substantial efforts to decrease vehicle production across all categories which led to the creation of lighter, more aerodynamic, and fuel-efficient vehicles.

GM was the first to incorporate an air bag in their production vehicles in 1973. In the following year, they also unveiled the catalytic converter, a noteworthy advancement for reducing emissions. This technology, created by GM, continues to be widely used throughout the automotive industry. In the 1980s and 1990s, it became essential for GM to operate as a unified global entity due to improved communication and emerging markets. Companies that did not adapt were left behind.

As a result, GM transformed itself into a global team and increased its emphasis on innovation and expansion. In 1982, GM achieved its biggest expansion by opening a new factory in Zargoza, Spain. This facility started producing the fuel-efficient Opel Corsa. Additionally, GM formed partnerships in China and India and acquired Saab and HUMMER to expand its family of brands. The company also enhanced the diversity and variety of vehicles sold globally.

In 1995, global vehicle sales surpassed 3 million units for the first time, with 5 million vehicles sold in the US. Additionally, GM established its first joint venture agreement in China. As we entered the digital age, concerns about the environment became more prominent. In response, GM developed innovative vehicles, including fuel-efficient gasoline engines, biofuels, and hybrids.

In 2003, GM partnered with Shell Hydrogen, a division of Shell Oil, to develop an existing demonstration of hydrogen fuel cells and fueling infrastructure technology in the Washington DC area. The demonstration featured

the state's first hydrogen pump at a Shell retail gas station to support a GM fleet of fuel cell vehicles. Long term, GM is focused on the eventual commercialization of the hydrogen fuel cell vehicle.

What is Strategy

Strategy is a form of activities that seeks to achieve the objectives of the organization and adapt its scope, resources, and operations to environmental changes in the long term. (Kaplan pg.3) It can also be defined as a set of managerial decision and actions that determines the long-term performance of a firm. The word strategy is used in many ways, people talk about a strategy for a business, a strategy for a football match, a strategy for a military campaign or a strategy for revising for a set of exams.

Henry Mintzberg at McGill University in Montreal proposed his five Ps of scheme in 1987, stating that the term "strategy" can be used in various ways. A strategy can be a plan, which is a program or set of guidelines for dealing with a situation. It is developed intentionally and progressively. Alternatively, a strategy can be a gambit, designed to indirectly or deviously thwart or gain an advantage over opponents.

Form

A program alone is not enough; scheme is a form of behavior. Strategy is a form of action, whether it is intended or not. Programs represent intended strategies, while forms represent realized strategies.

Position

Scheme is a way to gain a position in an organizational environment. It acts as a mediator between the organization and its environment, bridging the internal and external contexts.

Position

Scheme is a perspective, a deeply

ingrained way of understanding the world.

The text highlights that a position shared by members of an organization can be identified through their purpose or actions. Four 'generic' strategies are presented by Whittington (2002): classical (planning approach), evolutionary (efficiency driven), processual (trade-like), and systemic (internationally sensitive). These strategies are further explained with their respective attributes.

• Classical Strategy: Unitary and Deliberate
• Processual Strategy: Pluralist and Emergent
• Evolutionary Strategy: Unitary and Emergent
• Systemic Strategy: Pluralist and Deliberate.

The author also suggests that strategies can be classified as either unitary, which have a single outcome or goal (such as profit maximization), or pluralistic, which have multiple outcomes or goals.

Classical approach to Strategy:

The classical perspective on strategy focuses on profit as the ultimate goal and highlights rational planning as the means to achieve it. It suggests that managers should possess the readiness and capability to implement strategies that maximize profit through long-term planning.

Evolutionary approach to Strategy:

In contrast, the evolutionary approach does not rely on managerial skills or reasoning. It posits that market forces, rather than managers, determine profit maximization. According to this perspective, underperforming businesses are automatically eliminated from the market.

Processual approach to Strategy:

The processual perspective diverges from both the classical and evolutionary viewpoints. It rejects both the rational strategy-making advocated by the classical approach and the belief in leaving profit-maximization outcomes solely in the hands of the market, as proposed by evolutionists.

The processual attack involves working with the opportunities the world presents. Within this approach, members

of the organization collaborate to achieve a set of objectives that are agreeable to everyone.

Systemic strategy attack

Systemic theorists argue that organizations are capable of effective planning and action. In a systemic attack, an organization is not just composed of individuals, but also social groups with various interests. It includes categories and professions, nations and regions, families and gender. The strategy relies on the social environment in which the organization operates.

GM 'S CRITICAL INCIDENTS AND STRATEGIC PARADOXES

General Motors (GM) has consistently faced challenges and failures throughout its history, which have forced the company to continually reinvent itself and tackle strategic paradoxes. Despite being renowned as the automotive industry's most innovative, fastest-growing, and highest-performing corporation worldwide for a century, GM has had to find solutions to overcome these obstacles.

1980 's

In the early 1980s, GM invested significantly in modernizing its aging assembly plants in both the United States and overseas.

During the same period, the US economy faced a significant economic downturn, which had negative consequences for car sales and the consumer market. Consequently, the company had to close 11 plants worldwide due to insufficient support, resulting in over 30,000 job losses. In response to this crisis, GM adopted a strategy focused on automation that relied heavily on robots instead of human workers. Nevertheless, this approach received considerable criticism and raised issues concerning corporate governance.

According to Mintzberg, organizations that rely heavily on leaders and mechanization become highly bureaucratic. Instead, employees should have more empowerment.

1990's

In the 90's, after recovering from the decline of the 80's, GM experienced another sharp decline due to the great depression. The market share was gradually

decreasing while the high interest rate and economic downturn resulted in a pensions and benefits crisis. Consequently, they implemented cost-cutting measures by eliminating over 75,000 jobs over a period of 4 years.

However, even this maneuver was unable to distract GM from its sluggish progress. The strategy this time involved the company's concerted efforts to revamp its brand image, aiming to compete in various markets with substantial sales potential. As a result, the launch of Saturn proved to be a successful endeavor, particularly in its competition against smaller imported vehicles. The key factor behind this triumph was primarily attributable to a non-conventional customer approach and the creation of a unique image that appealed to diverse customer segments.

The 2000s: Despite facing challenges and setbacks for two decades, the year 2000 did not bring much optimism. While General Motors witnessed rapid growth in their global sales, especially in emerging markets like China and Russia where they were pioneers with their factories, a decrease in automotive sales worldwide due to a tightening credit market, fluctuating oil prices, and declining consumer confidence led to GM experiencing a 35% decline in December 2008 compared to the previous year. Additionally, Toyota surpassed GM's sales that same year, marking the end of GM's reign as the world's largest car manufacturer.

GM Strategy - Analysis

General Motors (GM) faced difficulties in the trading market and a decrease in revenues, leading to their bankruptcy protection filing in June 2009. This resulted in the federal government gaining a 61% ownership stake in the company. As the newly owned GM, strategic actions were implemented to maintain profitability during periods of low sales. These actions included substantial reductions in hourly

labor expenses and shutting down brands like Saturn and Hummer.

In its past, General Motors has experienced both triumphs and setbacks.

Previously known for its global presence, GM has adopted various strategic perspectives according to Mintzberg's literature. Over the century, its overall strategy seems to have maintained a consistent shape, aligning with Mintzberg's suggestions. Initially, GM pursued a diverse range of opportunities without a focused direction. However, the company's morning mainly focused on rapid growth and took the lead by producing automobiles for all market segments under unique brand names.

Travelling too far back in time could hinder the analysis of the company, so the survey focuses on incidents from about three decades ago. During the 1980s, the company encountered difficulties in managing its extensive range of products. According to most management academics, conducting environmental screening is crucial when considering strategy as a process or a plan.

Though not explicitly stated, the actions indicate GM's attitude towards scheme as a form. This is where an important error was made. In the 1980s, GM was making significant investments in assembly workss and also made a mixture of acquisitions. The acquired companies include Huges Aircraft Company, a defense mechanism electronics house, Electronic Data Systems, an information processing and communications company. Keep in mind that this decade brought in with it 'depression' to the American economic system. The purchasers in the car market were vanishing while GM was expanding.

It would not be wrong to note that GM was unable to abandon its growth strategy in the face of environmental uncertainty. Sometimes, a successful strategy is continued for too long despite its failure. In 1988, GM faced a depression but managed to survive

and regain momentum through drastic cost-cutting measures. These measures were highly unpopular and could have damaged the company's reputation. They also highlighted a lack of corporate governance, as over 30,000 people lost their jobs.

According to an analysis of Ansoff's growth portion matrix, the company diversified during the first half of the decade while also focusing on increasing efficiency. However, in the second half of the decade, the company experienced a decline in revenue. In response, the company president decided to further reduce costs by closing additional plants, resulting in 70,000 job losses. This decision had the potential to harm GM's reputation in the national market. To counteract this, a product development strategy was implemented, and the Saturn Line of cars was introduced. This strategy proved successful, particularly due to improved customer service.

The company underwent frequent internal leadership changes, but it continued to remain highly bureaucratic and politicized. This was largely due to the fact that the majority of leaders were promoted from within the company and had a personal interest in its success. The implementation of a unified code for corporate governance would argue that this practice was unethical. This is because there should be a clear distinction between owners and management.

GM never had the opportunity to relax over the two decades. However, on the brink of the new millennium, the company had a significant standing in the US car market, holding 30.9 percent. Sales reached a peak of over $177 billion dollars, with a net profit of $1.5 billion. In my opinion, the success has been overstated. The increase in market share was achieved through substantial investments in franchise and reduced margins.

Looking back, it

is evident that the company had a net income of $4.9 billion from $110 billion in gross revenues. The question is whether this slim margin is sustainable or not. The current situation of GM suggests that it has not been sustainable. Many experts argue that sustainability is achieved by gaining consumer confidence rather than merely following a trend. While it is true that Hummer and Cadilac once represented the opinions of the people, this strategy could not have lasted long given the increasing cost of gasoline and concerns about the environment.

GM's lack of proactivity in its approach resulted in the closure of its Hummer and Saturn lines, indicating another strategic weakness. The company was also non-proactive in its attack. According to Johnson, Whittington, and Scholes, strategic planning involves scheme selection and execution. Mintzberg proposes the concept of emergent schemes, where schemes develop through directional actions.

Mintzberg's scheme has not been suitable for GM in this situation. The recent incident has been a life and death situation for GM. With the fall of Lehman Brothers and the credit crunch, the entire world was engulfed in recession. While some of the emerging economies like India and China are still growing, most underdeveloped economies are still trapped in recession. GM has been facing a lot of challenges in the recession and many critics believe it is on the verge of bankruptcy. GM has undergone numerous strategic changes in recent years.

Its main focus appears to be on downsizing the company. The decreasing demand in the car market has forced GM to reduce the size of its operations. GM has faced tough competition from Toyota, which has surpassed GM in

global sales. The company filed for bankruptcy last year and has been undergoing restructuring since then.
Conclusion ; A ; Recommendation
The analysis of General Motors throughout its existence is extremely challenging.

Over the years, GM has experienced various fluctuations in its growth. Throughout the century, the company has consistently pursued expansion. GM has continuously emphasized the importance of growing through both product and market development. In order to cater to a wide range of customers, GM introduced numerous brands.

The primary strategic goal of GM was to gain market share for many decades. However, circumstances have now changed. In its pursuit of market share, GM went too far and lost control over its costs. By the end of 2007, the American economy experienced the largest credit crunch in history.

The impact of the financial crisis was significant, causing many companies to go bankrupt, including GM. The Obama administration introduced programs to rebuild the GM Empire. The company will need to make strategic changes and will face numerous challenges. Matthew Norton has proposed major reforms to help the company revive.

The analysis of trade name restructuring, cost film editing, and fuel efficiency also relies on past statistics. The survey emphasizes the effectiveness of downsizing in order to address the organization's enormous size and declining sales in the global car market. Given the world economic recession, it is not feasible for GM to maintain most of its trade names, and it would be more advantageous for the company to sell its divisions.

If there are no available options, it may be necessary to close down some divisions. Challenges include the risks and high retaliation involved in retrenchment. Downsizing will result in

a significant amount of layoffs. General Motors (GM) has a notorious history of shutting down its plants in the 1980s and 1990s as well.

Losing the trade name name at such an important phase will hinder the organization in the future.


Brand Positioning


GM has positioned its trade name as a manufacturer of powerful and fuel-consuming machines. This brand identity will not be acceptable among the growing environmentally conscious and fuel efficient population. Therefore, GM needs to produce and market cars that embrace efficiency and clean energy.

Creating a range of hybrid cars might not be a bad idea. However, being too aggressive with multiple brands can be detrimental. Challenges include GM not excelling in efficiency compared to companies like Honda and Toyota, who are ahead in this field with cars like the Toyota Prius and Honda Civic Hybrid. In addition to competitive challenges, GM will also need to restructure assembly plants for modern technology. It already faces cash deficits and will encounter difficulties in financing additional funds for investment.

Diversification is a unique field that is contrary to the goal of downsizing. In both the United States and United Kingdom, many individuals experience heavy traffic with cars moving at speeds of 2-3 miles per hour. GM has the opportunity to become a company that offers transportation information to commuters, which would not only increase sales but also revitalize GM's brand. This initiative would demonstrate GM's commitment to Corporate Social Responsibility.

Challenges: GM will need to work closely with government organizations in order to provide traffic information. While it may have cooperation and approval from its domestic government, it will

still face difficulties in coordinating with them due to its lack of expertise in the field.

Consensus Building This point seems unfamiliar and unclear when considered alone, but according to the strategic literature, the study suggests working together in a more equal structure and delegating power throughout the organization. Over the years, GM has observed low morale among its employees. In fact, GM has never valued its employees at lower levels.

The text suggests that a more democratic approach needs to be implemented to combat bureaucratism. Recognition should be given not only to employees, but also to traders and providers. The main challenge will come from existing governments who are unfamiliar with this cultural shift. Additionally, one may question the value of being kind to everyone when our existence is hanging in the balance.

Market Expansion


Both the American and European markets are highly volatile and declining. GM should focus on the emerging economies of India and China, not only as potential markets but also from a production standpoint.

In order to establish itself in the global markets of the future, GM needs to expand its presence in emerging economies. According to Ansoff's growth-share matrix, this is also a recommended strategy when current markets are saturated. However, there are challenges to overcome: emerging economies have different tastes and lifestyles, which may require GM to adapt to a new culture that may not fully support its global strategy. Although GM has already established a presence in both markets, it is still relatively new compared to companies like Toyota and Honda.

Confronting international competition will involve challenging the constraints on resources caused by the liquidity crunch.