General Motors Case

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EXECUTIVE SUMMARY

General Motors is primarily engaged in automotive production and marketing and financing and insurance operations. GM designs, manufactures, and markets vehicles worldwide, have its largest operating presence in North America. The core competence of General Motors is innovation. This is the driving force behind its $190 above turnover. General Motors has been utilizing innovation in service ad technology to secure itself a dominant position in the automobile industry, since 1908.

The main problems faced by General motors are declining U.S. automobile market share, high pension costs, rising fuel prices, lack of differentiated products, inability to generate revenues from its core activity (manufacture of cars), over dependence on its financing division and its inefficient use of assets. General Motors can adopt several strategies and tactics to overcome internal weaknesses and external threats. Some of these are: 1.Introducing self managed creative work teams to improve and speed- up product development of new technologies in emerging markets such as China and Europe. 2.Reduce dependence on GMC and focus resources on core products i.e. cars and SUVs to generate revenues. 3.Cut costs by dropping unsuccessful product lines and introducing cars that accommodate the needs of the car-buying public. 4.Shift major operations to lucrative European and Asian markets in order to avoid high operating costs, including the high healthcare costs imposed by UAW 5.Reduce threat of lower priced products by introducing a flexible product line and trimming the inefficient ones.

The changes that are needed to make General Motors more competitive are to change the organizational structure with the Chairman and CEO positions segregated and the elimination of vice chairman positions. GM should redirect development and marketing costs from gas fueled vehicles to alternative vehicles at a minimum of 50% of overall cost. General Motors should offer a wider range of fuel-efficient mini-cars as there is likely to be an upward trend for these due to the occurrence of traffic congestion worldwide.

The company should gain market share in the European and the Asian markets, which are quite promising. General Motors should change public opinion and overall image of company to be perceived as an environmentally friendly, and an auto industry leader in alternative vehicles.

INTRODUCTION

General Motors is primarily engaged in automotive production and marketing and financing and insurance operations. GM designs, manufactures, and markets vehicles worldwide, having its largest operating presence in North America. GM’s finance and insurance operations primarily relate to General Motors Acceptance Corporation (GMAC), a wholly owned subsidiary of GM, which provides a broad range of financial services, including automotive finance and mortgage products and services.

CORE COMPETENCE

The core competence of General Motors is innovation. This is the driving force behind its $190 above 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 minicars 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.

PROBLEMS FACING GENERAL MOTORS

There are a number of problems facing the company.
1.The share of the U.S. automobile market held by General Motors in 1976 was 47% but this has now declined to 26%. This weakens the...
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