Economic/Competitive Strategy Analysis for General Motors Company

Topics: General Motors, Supply and demand, Automotive industry Pages: 10 (3223 words) Published: February 28, 2013
Economic/Competitive Strategy Analysis
General Motors Company

Group #2: Roberto Paternina, Luvy Garcia, Ruperto Granthon, Camilla Valdez, George Leal, Eric Reeves, and Rafael Franjul June 16, 2012
Introductory description of the business, its goals, and its markets General Motors Company is an American car manufacturing company that sold 9 million vehicles, delivered USD 135M in revenue and USD 6.1 M profit in FY11. The company was founded in Flint, Michigan more than 100 years ago. Today, General Motors is the world’s largest automotive company with operations in more than 120 countries. It has a network of 4,500 dealers globally which deliver 70 percent of its sales from outside the U.S. mainly from four markets: China, Brazil, UK, and Germany. The auto manufacturer produces under the following brands: Chevrolet, Buick, GMC, Cadillac, Baojun, Holden, Isuzu, Jiefang, Opel, Vauxhall and Wuling. They also have equity stakes in joint ventures in China including SAIC-GM, SAIC-GM-Wuling, FAW-GM and GM Korea. Along its history, the company has had important milestones worth mentioning. It started with only one brand: Buick and would buy more than 20 additional ones during its development process. Since the beginning, the company was focused on breakthrough innovation and design that started in the 70’s with engines that could run on low-lead or unleaded gasoline, the air bag and the first steps into reducing emissions. By the 1980’s the company made great efforts to become a global enterprise, it included signatures brands like Hummer into its portfolio and even partnered with Toyota. However, since the early 70’s Asian car manufacturers started developing and by the 90’s Japanese, German, and Korean manufacturers took the lead in most passenger car segments. By the turn of the century, GM had consolidated strongly in emerging markets like China and Brazil as it continued its legacy of innovation with hybrid systems. In 2008 GM filed for bankruptcy and after receiving a loan from the US government, its major stakeholders became: the U.S. Treasury, Canadian government, and the UAW Retiree Medical Benefit Trust. “The new GM is a smaller, leaner company than its predecessor”. While committed to manufacturing the best quality vehicles in the market in the short term, the company is focused on delivering long term investment value to its shareholders by operating with a strong financial foundation that will enable growth. The company’s strategy for delivering on this objective consists of offering best class products in market that sell well and bring revenue. Their business model is intended to self-sustain so they can reinvest and drive improvement in design, optimize manufacturing, strengthen the brand and price competitively. Their formula is based on Design, Bbuild by maximizing efficiencies of facilities in an environmentally and socially-responsible manner, sSell offering higher residual value, with lower incentives and appropriate pricing, Reinvest cash and profits into technology development putting financial strength to work to ensure the economic viability for the company. Macroeconomic Environment

Trends in US GDP growth have been fairly inconsistent in recent years. Growth was 3.1% in 2010, down to 1.7% growth in 2011, despite a 3% growth rate in the final quarter. Unfortunately, growth in the first quarter slowed down a bit from quarter 4 2011 to 2.2%1in the first quarter of 2012. Economists expect the trend from quarter 1 to stay consistent and expect growth to end up at 2.3%2for 2012. The slight decrease in GDP growth along with the projected average inflation of 3% and the unemployment rate being forecast to have a small drop of .2% from the current national average of 8.2% to 8.0% means a nominal increase in disposable income for the US. Price trends in the energy market expect to be somewhat flat. Crude oil is expected to trade between $105 and $110 a barrel pushing into the...
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