Gm Term Paper

Topics: Automotive industry, General Motors, Asset Pages: 11 (3832 words) Published: January 6, 2013

General Motors

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Table of Contents
Competition and Industry Dynamics5
The Global Financial Crisis and Automobile Industry6
SWOT Analysis7
Strategic Measures Taken By General Motors10

General Motors is an automobile manufacturer that held the title of the largest American automobile company until 2008 and for 77 years held the title of the largest automobile manufacturer in the world (General Motors, 2012). The production of the company is established in 35 countries around the world and its automobiles are sold in 192 countries. The headquarters of the company is located in Detroit, USA. The automobiles manufactured by General Motors were marketed under many brands – most renowned among them were Buick, Cadillac, Chevrolet, GMC, Holden, Hummer (which was discontinued in 2010), Opel, Pontiac and Saturn. But in the context of the restructuring of the group, which officially began in June 2009, only six brands are kept by the company, and the rest are either sold or discontinued. In a difficult environment for the American automobile industry and the economy in general, General Motors is currently on the verge of bankruptcy. Since the year 2000, General Motors had lost $86 billion, while the balance sheet of the company had lost more than 90% of its value. The group had received $50 billion through the federal government protectionism, in the form of loans or increase in equity. Since 2010, the head of GM is Dan Akerson. Background

The company was founded in 1908 by William Crapo; however, it was his successor Alfred P. Sloan who transformed it into the largest car manufacturer in the world. Initially, the company’s headquarters was located in Flint in the state of Michigan, and then later moved to Detroit. GM bought Pontiac and Cadillac in 1909, as well as, its major component suppliers for backward integration (Naughton & Clothier, 2012). General Motors tried to buy Ford for a bid of 9.5 million dollars in 1909, but it later abandoned the deal. In the year 1915, GM entered the index Dow Jones. 1915-1917 was exponential growth for the company and the production of Chevrolet increased from 10,000 units to more than 100,000. The flagship model of the group was Chevrolet at the time (Crumm, 2010). In 1916, the share price of GM exceeded 1000 dollars on the NYSE which was very rare at the time. International expansion for General Motors came in the year 1912, when General Motors acquired the largest car factory in Germany named Opal. Under the Hitler regime, the production turned to the military sector. This new orientation increased profits generated by GM. By the end of 1939, the value of Opel exceeded 86 million, or nearly doubled the initial investment of GM (Gall, 2010). During this time, GM continued to reap profits by exploiting cheap labor, which would work up to 60 hours a week. The company used a portion of its profits to reinvest in Germany, including the acquisition by a foundry in Leipzig. Figure 1 - General Motors Operating Margins (source: Bloomberg Website) At the end of the first decade of the 19th century, General Motor’s financial condition deteriorated. By June 2009, the company initiated the procedure of bankruptcy. Under the terms of the bankruptcy, the U.S. government provided the company with about $ 30 billion, and in return received a 60% interest in the concern; the Government of Canada gained 12% of the stake for $9.5 billion, while the United Auto Workers union assumed ownership of 17.5% of the shares. The remaining 10.5% of shares were divided between the major lenders of the company. It was assumed that after the bankruptcy of the concern will be split into two companies, the...
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