The General Motors Company Overview Business Essay Example

Europe (GME), GM International Operations (GMIO), GM South America (GMSA), and GM Financial (General Motors, 2012). All of these sections can be considered as Strategic Business Units.

Automotive Business

The range of products offered by General Motors includes a worldwide collection of cars, crossovers, and trucks.

GM's main focus is to lead in various areas of vehicle development, including design, quality, dependability, telematics, and safety. They are also committed to advancing energy efficiency and diversity while developing advanced propulsion technologies like electric vehicles such as the Chevrolet Volt. Their business is diversified across different products and geographic markets. They cater to the sales and service needs of both retail and fleet customers through independent dealers worldwide. In 2011, more than 70% of their total vehicle sales volume came from international markets outside the United States, with almost half originating from emerging markets (Brazil, Russia, India, China) that have experienced significant industry growth.

The automotive concern of General Motors is divided into four geographical sectors: GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO), and GM South America (GMSA) (General Motors, 2012). In 2011, GMNA represented 32.4% of their vehicle sales volume and had the largest market share at 18.4%. It comprises manufacturing and distribution operations in the U.S., Canada, Mexico, as well as sales and distribution operations in Central America and the Caribbean. Conversely, GME operates sales, manufacturing, and distribution operations across Western and Central Europe.

In 2011, GME's vehicle sales in Europe accounted for 19.2% of their total sales, which included Western and Central Europe as well as Eastern Europe (including Russia and other members of the Commonwealth of Independent States). Their

market share in this region was 8.8%. GME includes Chevrolet vehicles sold in Europe as part of their sales volume and market share data through GMIO, which handles sales, manufacturing, and distribution operations across Asia-Pacific, Eastern Europe, Africa, and the Middle East.

General Motors (GM) has its largest segment in vehicle gross revenues volume in the Asia-Pacific, Africa and the Middle East region, which accounted for 36.6% of global vehicle sales volume in 2011. This includes sales through joint ventures. In this region, GM had a market share of 9.5%, with a significant portion of its sales volume coming from China at 77.1%.

GMSA, another division of GM, operates in multiple countries including Brazil, Argentina, Colombia, Ecuador, Venezuela, Bolivia, Chile, Paraguay, Peru and Uruguay for sales and distribution purposes. In 2011,GMSA contributed to 11.8% of GM's overall vehicle sales volume.They held the largest market share at18.8% within thismarketand ranked thirdin Brazilspecifically.The majority(59.4%)of GMSA's vehicle sales came from Brazil.

Automotive Financing

GM Financial specializes in purchasing retail car installment sales contracts originated by GM and non-GM franchised and selected independent dealers in the sale of used and new cars. GM Financial also offers lease products through GM franchises in connection with the sale of used and new cars, targeting customers with subprime and prime credit scores. GM Financial primarily generates revenue and cash flows by purchasing, holding, subsequently securitizing, and servicing finance receivables. To finance the acquisition of receivables before securitization, this financial arm utilizes available cash and borrows under its credit facilities. GM Financial earns finance charge income on finance receivables and pays interest expense on borrowings under its credit facilities. Periodically, it transfers receivables to securitization trusts

that issue asset-backed securities to investors.

The securitization trusts are special purpose entities ( SPEs ) that are also variable interest entities that meet the requirements to be consolidated in the financial statements ( General Motors, 2012 ) .


Current Business Strategies at GM



Generic Strategy

GM utilizes differentiation focus strategy, as its competitive strategy.A In Britain, you can purchase a Vauxhall, a Chevrolet, a Saab, a Cadillac or a Hummer. On the Continent, you can trade in the Vauxhall for an Opel. In China, perhaps you would prefer a Buick, in Dubai a GMC.

General Motors (GM) is a multinational corporation that offers a diverse range of automotive brands, including Holden, Chevrolet, Opel, Vauxhall, Cadillac, and Hummer. While Holdens are exclusively available in Australia and New Zealand, all these brands are part of the GM family. Instead of focusing on one product, GM's strategy is to provide customers with a variety of choices.

Chevrolets target entry-level car buyers in Eastern and Central Europe while Opels and Vauxhalls cater to middle-market consumers with a "progressive" approach towards new technology. Cadillacs enjoy popularity among wealthy buyers in Russia while Hummers are designed for enthusiasts worldwide regardless of their location (Pfanner, 2008).

Their vision revolves around designing, building and selling the world's best vehicles.

The main components of General Motors' plan to achieve their goal include: providing a variety of high-quality vehicles to maximize sales in any market situation, selling their vehicles globally by focusing on developed markets and expanding their presence in emerging markets, improving revenue generation and maintaining a competitive cost structure to ensure profitability, and sustaining a

strong financial position through reducing financial leverage due to their business model's high operating leverage (General Motors, 2012).

Product development

The strategy for product development involves the creation or modification of new products to give them a fresh appeal. These products are then offered in existing or new markets. This process is complex and requires careful consideration of competition and customer demands, funding for prototypes and manufacturing processes, as well as a creative marketing and communications plan (Nielsen, 2012).

GM uses merchandise development as its corporate strategy by maintaining a diverse portfolio of vehicles in order to meet global consumer preferences. They achieve this by focusing their design, technology, and marketing resources on select brands and architectures. Their goal is to increase the proportion of vehicles produced from common global architectures to over 50% by 2015, compared to less than 17% currently. This approach is expected to result in higher investment per architecture and brand, enhancing product development and manufacturing flexibility. Ultimately, it will enable the company to maintain a consistent schedule of important new product launches in the future. This strategy encompasses the four brand strategy in the U.S.

General Motors (GM) plans to increase selling expenses for each brand as part of their strategy to develop vehicles in all major sections of the global markets where GM competes. One example is the introduction of the Chevrolet Cruze into the small car section in the U.S. market in September 2010, a segment where GM had historically been underrepresented.

GM also continues to invest in various technologies that promote energy diversity and efficiency, as well as safety, telematics, and infotainment technology. They are dedicated to advancing propulsion technologies and offering

fuel-efficient options that utilize sources such as oil, biofuels, hydrogen, and electricity. The introduction of the new Chevrolet Volt exemplifies GM's commitment to increasing fuel efficiency in vehicles with internal combustion engines.

The text highlights General Motors' (GM) efforts to enhance performance and fuel efficiency in their vehicles. These enhancements will be achieved through features like cylinder inactivation, direct injection, variable valve timing, turbocharging with engine retrenchment, and six velocity transmittals. For instance, GM anticipates the Chevrolet Cruze Eco to achieve approximately 40 mpg on the highway using a traditional internal combustion engine. Furthermore, GM is expanding their telematics and infotainment offerings by utilizing services such as OnStar and partnering with companies like Google. This allows GM to offer safety, security, navigation, and connectivity systems (General Motors, 2012).

GM also acknowledges the significance of diversity in catering to a global market with distinct segments. They view diversity as crucial for their business strategy as it enables them to manufacture cars that meet diverse customer needs.

In their Diversity Strategy, General Motors focuses on five countries. They have clients worldwide and distribute franchises to ensure that customer preferences are reflected in GM products. They also prioritize an inclusive workplace environment that allows employees to perform at their best, including providing diversity training. The GM Foundation supports communities with a focus on diverse sectors such as health, education, and human rights. Suppliers are also included through the growth of a diverse and competitive supply base. The GM Trader Development Network aims to provide a profitable dealer network that reflects the diversity of the American market, supporting underrepresented groups such as women through initiatives like the GM Women retail network and

the National Candidate Program. In addition, General Motors utilizes vertical integration, owning both its upstream suppliers and downstream buyers.

The vertical scope of a company is an important consideration in its corporate strategy, as it can have a significant impact on its position in the industry in terms of cost, differentiation, and other strategic issues. Forward integration refers to the expansion of activities downstream, while backward integration refers to the expansion upstream. GM is expanding its activities downstream by entering into contracts with authorized dealers to sell specified product lines at wholesale prices. These dealers then sell the vehicles to retail customers and also offer parts, accessories, service, and repairs for GM vehicles using GM parts and accessories. By offering multiple GM brands at a single franchise, dealers aim to enhance profitability.

Under their limited guarantee plan, traders are authorized to provide service for GM vehicles, but only with GM parts. In addition, these traders typically offer their customers access to credit or rental financing, vehicle insurance, and extended service contracts provided by GM Financial, Ally Financial, Inc., and other financial institutions (United States Securities and Exchange Commission, 2011). The success of GM franchises relies on the quality of their relationships with dealers and distributors, as these traders play a crucial role in the sales and service experience for end consumers.

General Motors (GM) is subject to both contractual terms with traders and state/provincial franchise laws. These laws can supersede contract terms and impose specific regulations for dealer network changes, contract terminations, and other matters (United States Securities and Exchange Commission, 2011). GM's objective is global vehicle sales and competitiveness in major markets. To achieve this, they will

expand their GM North America (GMNA) product lineup by launching 13 new vehicles across four brands in 2011-2012. Primarily targeting the growing automotive and crossover segments lacking representation, GM also plans to introduce an additional 29 vehicles between 2013-2014. These efforts aim to create a more balanced U.S. portfolio.

In 2010, GM's market share for autos, trucks, and crossing overs was 36%, 38%, and 26% respectively. This was compared to trucks having a market share of 51% in 2006. GM has set a goal to enhance the quality and perception of their vehicles in Europe. They plan on achieving this by refreshing 80% of the Opel/Vauxhall carlines volume by 2012, ensuring that the models are less than three years old. For the year 2011, they have scheduled four product launches. Additionally, as part of Chevrolet's portfolio greening strategy which complements the Opel/Vauxhall brands across Europe, all Chevrolet models will be transferred to new global architectures (General Motors, 2012).

The main goal is to increase gross revenues in GMIO, specifically in China, to execute growth strategies in countries where GM already has a strong presence, such as China. Additionally, the aim is to improve market share in other important markets like South Korea, South Africa, Russia, India, and the ASEAN region. GM plans to introduce 70 new vehicles in GMIO by 2012. To enhance and strengthen the GMIO product portfolio, three strategies will be implemented: utilizing GM global architectures, developing local and regional solutions to meet specific market needs, and expanding collaboration opportunities with joint venture partners. Furthermore, in order to increase sales in GMSA, particularly in Brazil, GM intends to launch 40 new vehicles in GMSA by

2011.

General Motors (GM) implemented three strategies to enhance their Global Mass Merchandise Association (GMSA) product offering. These included purchasing on global architectures, developing local and regional solutions to meet specific market demands, and expanding joint venture partner collaboration opportunities (General Motors, 2012).

One key focus for GM was ensuring that competitive financing options were available to both dealers and customers. To achieve this, the company maintained multiple funding plans and agreements with third parties for wholesale and retail customers to utilize when purchasing or leasing vehicles. Through longstanding partnerships with Ally Financial and various other lenders on a worldwide, regional, and local scale, GM provided access to a wide range of financing choices for its customers and dealers (General Motors, 2012).

GM aimed to further expand the range of funding options available to its customers and dealers in order to boost vehicle sales. This was achieved through two specific objectives: ensuring the availability of financing options and offering competitive and transparent pricing for funding (General Motors, 2012).

GM Financial aimed to enhance the convenience of leasing and sub-prime financing options for General Motors customers in the United States and Canada during economic fluctuations. Additionally, there were plans to utilize GM Financial to create targeted customer marketing initiatives in order to expand vehicle sales. The goal was to reduce breakeven levels through improved revenue realization and a competitive cost structure. In developed markets, General Motors aimed to enhance its cost structure in order to achieve profitability at lower industry volumes (General Motors, 2012).

The text highlights the importance of capitalizing on cost construction improvement and maintaining reduced incentive levels in GMNA by extending the cost reduction and operating flexibility that

has resulted from the North American restructuring. The current labor agreements in the United States and Canada allow for the use of a lower tiered pay and benefit structure for new hires, part-time employees, and temporary employees. GM aimed to increase vehicle profitability by maintaining competitive incentive levels, bolstering their product portfolio, and actively managing production levels through monitoring dealer inventory levels. Based on GMNA's 2010 market share, it was projected that GMNA would have achieved break-even at a wholesale volume of about 2.3 million vehicles for the period ending December 31, 2010, consistent with an annual U.S. industry sales volume of approximately 9.5 to 10.0 million vehicles ( General Motors, 2012 ).

GM executed the Opel/Vauxhall restructuring program to reduce vehicle fabrication costs. The program involved rationalization of fabrication, decreased head count, labor cost grants, and efficiency initiatives. Specifically, GM agreed to reduce European fabrication capacity by 20%, which included closing the Antwerp facility in Belgium and streamlining powertrain operations in Bochum and Kaiserslautern in Germany. Furthermore, GM reached an agreement with labor unions in Europe to decrease labor costs by Euro 265 million annually. The goal of the restructuring, alongside a revitalized product portfolio, was to restore profitability to the GME business.

Enhance fabrication flexibleness by primarily producing vehicles in locations where they are sold and having significant fabrication capacity in medium- and low-priced states. The purpose of this is to maximize capacity use across the production footprint and meet demand without requiring significant additional capital investment. For example, GM was able to take advantage of a global architecture and start initial production for the U.S. of the Buick Regal 11 months ahead of schedule

by temporarily switching production from North America to Russelsheim, Germany (General Motors, 2012).

To keep a strong balance sheet, GM aimed to minimize financial leverage given the high operating leverage and cyclical nature of the Motor industry.

Excess hard currency was to be used to refund debt and to provide discretionary contributions to the U.S. pension programs. GM planned to decrease fiscal purchases and achieve an investment class recognition evaluation over the long-run (General Motors, 2012).

Internationalization and Information Communication Strategy

General Motors (GM) aims to utilize ICT to enhance operational efficiency and generate cost savings. GM has implemented a globally integrated business model focused on deploying standardized technology and manufacturing platforms in any market worldwide. This approach facilitates GM's expansion into emerging markets and generates efficiencies and cost savings through the use of common infrastructure components and processes.

GM invested in information technologies to integrate its manufacturing plants, reduce costs, and speed up the implementation of new communication and collaboration applications. This was achieved through the implementation of the Plant Floor Controls Network (PFCN), a modern web architecture, at over 150 GM manufacturing plants worldwide. The PFCN solution replaced GM's outdated and customized legacy networks, which were becoming unreliable and expensive to maintain. The adoption of the PFCN solution allowed GM to standardize each plant's network design and establish a centralized technology team to monitor and troubleshoot network operations globally. As a result, network downtime decreased by approximately 70%, leading to fewer unplanned work stoppages on the factory floor.

Furthermore, GM now needs significantly fewer web applied scientists and analysts to support the same number of plants (Cisco, 2010). The standardized Cisco web design also aided GM in reducing its

inventory of web devices and spare parts, resulting in a 70% decrease in inventory transportation costs. Additionally, it facilitated the creation of cost-effective "global applications" that can be quickly implemented in plants, as well as automated system-management tasks such as upgrades and patches. Consequently, GM now spends 30% less time managing plant software. According to an analysis by Mainstay Partners, GM's investment in the Cisco-based PFCN solution will generate a return on investment (ROI) of 166% (Cisco, 2010).

Evaluation of GM's intended strategy

As a consequence of years of poor strategic decisions and operational issues, GM's market share in the US has declined to 20% for the first time in decades (compared to the peak of 51% dominance). Furthermore, its international sales now almost equal its domestic sales.

GM has transformed into a bureaucratic organization of massive proportions, making it difficult to succeed. The company has lost its focus on innovation and customer orientation, which used to be its foundation. For years now, GM has been producing unexciting and low-quality cars, lacking innovation and uniqueness. This has created a complete disconnect between customer needs and its products (Vaccara, 2009). The main issues faced by GM include inadequate product development (including a lack of innovation) and the struggle to create cars that appeal to the market. As a result, the company and its brands have developed a negative reputation. Additionally, GM's lack of customer focus and inability to listen to market demands have prevented it from providing customer value and resulted in significant declines in sales.

The disproportionate increase in healthcare and benefits costs, as well as giving in to union demands by implementing a plan to pay workers even

when there is no work, has led to financial deficits and problems with cash flow and operations. Additionally, the company's divisional organizational structure has become too large due to bureaucracy, making it difficult to manage multiple brands in various markets worldwide (Vaccara, 2009).

Emergent strategy

On June 2nd, 2009, General Motors filed for bankruptcy at a federal courthouse in downtown Manhattan. This marked the largest industrial insolvency in US history. According to GM's bankruptcy filing, the company had $82.3 billion in assets and $172.8 billion in liabilities. This would make GM the fourth largest U.S. company.

According to Bankruptcydata.com, General Motors' bankruptcy is recorded as the second-largest in history, only surpassed by telecom WorldCom's bankruptcy in 2002 (Cark, 2009). During the bankruptcy process, GM disposed of plants, franchises, debt, and other financial obligations that it could no longer afford. After quickly emerging from bankruptcy, a "new GM" was established, consisting of the four brands that GM would continue to operate in the American market: Chevrolet, Cadillac, GMC, and Buick. Additionally, many of its successful international operations were also retained (Isidore, 2009).

Obama stated that the comprehensive restructuring of GM would proceed with the US government maintaining a 60% stake in the company. However, it was crucial to preserve an emblematic symbol of American business and sustain a viable US automotive industry (Cark, 2009). The present-day business strategy of GM is a result of the past failures of the previous GM and their decision to avoid repeating the same mistakes. Many of the current strategies are part of the ones enforced on the old GM during its borrowing period.

Invention and Entrepreneurship

GM's invention is driven by market pull, which goes beyond

innovation and recognizes the importance of meeting existing usage. GM is making efforts to establish a direct connection with customers and emphasize that their feedback is important. The company now offers a "60-day satisfaction guarantee," reflecting the motto: "If you don't love it, we'll take it back." GM is also producing environmentally friendly vehicles.

A more environmentally conscious population appears to be highly interested in this scheme and it seems to be working well due to the rising cost of fuel. Therefore, it is crucial to focus on issues such as the availability of alternative fuels and revising current infrastructure to assess the feasibility of the scheme in the long run (Vaccara, 2009).

Open or closed innovation

Open innovation means that valuable ideas can come from within or outside the company, and can also be brought to market from within or outside the company (Chesbrough, 2003), while closed innovation is a traditional approach to innovation where organizations rely on their own internal resources, such as research labs and marketing departments (Johnson, Whittington, & Scholes, 2011). GM follows an open innovation model. GM collects data from customer clinics and marketing surveys, and combines this information with formal assessments of new technology. These analyses are used to guide vehicle and feature development studies, which are carefully reviewed to determine appropriate responses to emerging market and business opportunities.

One possible response to a peculiar thought is to not take any action if it is believed to not provide true value for the client. However, in most cases, the response leads to action, which can be taken in one of two ways (Howell, 2000). The first approach is to "implement it into the

product now." This option is chosen when the technology is already prepared and incorporating it into a product is simply a matter of finalizing development and vehicle integration. In such cases, a targeted production date is set and it becomes part of the product plan. If a technology is not yet mature, it becomes the responsibility of the R;D Center to develop it further until it is ready to be integrated into a future product (Howell, 2000).

The purpose of the invention procedure is to ensure a consistent flow of products and engineering options, based on the company's understanding of market trends. These options provide GM with opportunities to quickly capitalize on new developments. The procedure is intended to be dynamic, allowing for continuous flow of new information and ideas. Each time the company goes through an innovation cycle, they gain knowledge and identify new ways to apply it to future product and engineering plans (Howell, 2000).

Pioneers or Followers The primary goal of GM directors is to be leaders rather than followers. The company aims to introduce its innovation to the market and be the first to do so. GM strives to become a global leader in car manufacturing, providing comprehensive customer value through customer-driven service, innovation, technology, and competitive operations. Their focus is on reinventing the automotive industry while prioritizing the protection and contribution to a cleaner world.

They desire to find a reputable workplace where all employees take pride in their roles and performance within the company. This is a place where customers and suppliers are their utmost priority and communication with them is seamless across all touchpoints. Additionally, they aim to create an environment

where distributors are proud to be a part of the family and have confidence in the quality and safety of their products. Lastly, they strive to experiment with ideas in order to develop new designs and innovative products, ensuring consumer satisfaction and giving shareholders a fair return on their investment (General Motors, 2011).