General Motors Case Study-2005
Case Analysis
General Motors - 2005
Course Instructor: Prof Dr Ali Askari
Date: October 29th, 2010
Group # 5
Niveen Qadri (29)
Muzna Ahmed (28)
Maryam Khan (21)
Sidra-Tun-Nisa (37)
General Motors
I. EXECUTIVE SUMMARY
• Mission: General Motors is committed 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.
• From 1908 to 1976, it had grown rapidly. But today its market share has fallen and together with challenges posed by economic conditions, in the form of rising healthcare costs and fuel costs and stiff completion GM is facing a tough time in sustaining its profits. GM is deriving its 100% profits from financing cars and not from the sales of vehicles. Internal reasons 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.
• What should GM do about its junk-bond status?
Because of the high risk of the bonds issued and low credibility of the company, this strategy is not sustainable and is a weak method of covering pension costs. I suggest the company increase the employees’ participation in covering the plan in the form of selling bonds directly to employees in the form of employee-stock-ownership-programs.
• Why has GM lost much of its competitiveness?
GM has failed to adapt to the fast changes in the automotive industry relating to technological advancements and consumer preferences. As a result, its product and positioning strategies have led its products to become obsolete. Also, its strategy has been more reactive in terms of tapping opportunities in new markets and
General Motors - 2005
Course Instructor: Prof Dr Ali Askari
Date: October 29th, 2010
Group # 5
Niveen Qadri (29)
Muzna Ahmed (28)
Maryam Khan (21)
Sidra-Tun-Nisa (37)
General Motors
I. EXECUTIVE SUMMARY
• Mission: General Motors is committed 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.
• From 1908 to 1976, it had grown rapidly. But today its market share has fallen and together with challenges posed by economic conditions, in the form of rising healthcare costs and fuel costs and stiff completion GM is facing a tough time in sustaining its profits. GM is deriving its 100% profits from financing cars and not from the sales of vehicles. Internal reasons 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.
• What should GM do about its junk-bond status?
Because of the high risk of the bonds issued and low credibility of the company, this strategy is not sustainable and is a weak method of covering pension costs. I suggest the company increase the employees’ participation in covering the plan in the form of selling bonds directly to employees in the form of employee-stock-ownership-programs.
• Why has GM lost much of its competitiveness?
GM has failed to adapt to the fast changes in the automotive industry relating to technological advancements and consumer preferences. As a result, its product and positioning strategies have led its products to become obsolete. Also, its strategy has been more reactive in terms of tapping opportunities in new markets and