Global Strategy at General Motors

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Synopsis:

General Motors (hereafter GM) Company, one of the world’s largest automakers, traces its roots back to 1908 and its annual revenue in 2000 of $185 billion. The company sells 8 million vehicles per years, 3.2 million of which are produced and market outside of its North America. GM caught 27 percent share of the North America and 9 percent share of the market in the rest of the world as well as GM captured 12 percent share in the Western Europe in 2000 which is second only to that of ford. With its global headquarters in Detroit, GM employs 235,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. GM’s largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM’s OnStar subsidiary is the industry leader in vehicle safety, security and information services. General Motors Company acquired operations from General Motors Corporation on July 10, 2009, and references to prior periods in this and other press materials refer operations of the old General Motors Corporation. Though GM had a long presence in developing countries, until recently sales there accounted for only a little fraction of the company’s total international business. Traditionally GM used the developing countries as a dumping ground for the obsolete technology and outdated models and earned huge money from this aging investment. This strategy has seen as lack of commitment from top management and GM offered very low quality, made of old product. All decision, plan and marketing decision were centralized by Detroit headquarter and they acted as a market context. GM kept in its mind about the poverty, crime, geographical situation and politics and communism in the developing countries. On the other hand, GM Detroit headquarters kept away GM European operation from other part of the world. And because of this arm’s-length-basis, company had failure to share all the valuable technology, skill and practice among the subsidiaries. But it had appealing market, and high profit opportunities in the Europe. So, GM did tailor the specific market needs because it had worried about blowing off from market if it didn’t tailor the specific market. So, while the GM tight controlled over its operation in the developing country but in the some time GM was too lax in Europe and felt lack of overall strategic coherence. Since 1997, GM has been trying to switch a philosophy that centre of excellence may reside any where in the global operation. An embodiment of this is to set up new four plants in the developing countries with investing $2.2 billion. And the four plants are identical and they can able to imitate Toyota. At the Eisenach plant, GM leant lean production from Toyota and implemented this. So the plant which productivity rate is at least twice that of most North American assembly operations is most efficient in Europe operation and the best in GM. Although they reach the more scale economics, more efficiency, more synergy, and ability to match local preference, but this strategy are not working because GM still suffers from high costs, low perceive quality. Finally, GM thinks that the push toward global cars is misconceived. At the Opel’s Russelsheim design facility, the German based engineering has uttered concerns that distinctively European engineering features may be left by the wayside in the drive to devise what they see as blander “global” cars.

Question-1: How would you characterize the strategy pursued by GM in the (a) developing world and (b) Europe before 1997?

Answer: The question asked to characterize the strategy pursued by GM in the developing world and in Europe before 1997. So, first of all it is very important to notice...
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