Internationalization of General Motors

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Internationalization of General Motors

This paper examines the expansion of General Motors overseas in its various phases, as well as triggers for internationalization and the problems faced during the process. The paper also considers what benefits have been achieved through international growth, and how the company can be classified with regards to Bartlett and Ghosal’s 4 typologies. Finally, the paper discusses the concept of a “world car,” meeting the demands of customers across the globe.

General Motors, International; Internationalization; Globalization; Multinational; Growth Strategy; Volkswagen; Bartlett; Ghosal

1. Internationalization of GM

1.1 Early History

In the early 1900’s, the first companies that would form the company as we know it today began to emerge. The first of these was the Olds Motor Vehicle Company (later Olds Motor Works, makers of the Oldsmobile) in 1897, followed by Cadillac Automobile Company in 1902 and Buick Motor Company in 1903.

Under the leadership of William Durant, September 16th 1908 marked the birth of the General Motors Company, initially incorporating the Buick Motor Company. GM then purchased Olds Motor Works in November 1908, a 50% stake in the Oakland Motor Car Co (later Pontiac Motors) in January 1909, and Cadillac in July 1909. During its first few years of operation, GM also acquired a number of parts and accessories manufacturers, such as Champion Ignition Company (predecessor of AC Spark Plug) and Fisher Body Company, and also attempted to purchase Ford Motor Co. but were refused a $9.5 million loan from their bankers (GM.com Corporate History).

In 1911, however, as a result of the outstanding debts that the company had acquired, bankers stepped in and removed Durant from the management of General Motors. Durant retained his shares, helped set up the Chevrolet Motor Company and bought back the company, fusing the two companies into the General Motors Corporation on October 13th, 1916 (Wikipedia General Motors).

1.2 Multi-domestic Growth

Since the incorporation of the General Motors Corporation, the company continued to grow by merger and acquisition, and began to focus more on international markets. This shift in attention was to define their internalization strategy for the years to come.

The 1920s saw major acquisitions in Europe, and the company bought rights to the Opel and Vauxhall brands while establishing General Motors offices, factories, and warehouses in Germany , the UK, France, and Spain (GM.com Corporate History). . The process was duplicated on a smaller scale in selected parts of the world as well, such as Australia and New Zealand (where GM also bought rights to the Holden brand), Japan, South America (Uruguay and Brazil), the Near East (Egypt), and Africa (South Africa).

The strategy adopted for this period of growth was a mutli-domestic one, meaning that each subsidiary acted autonomously while reporting to the head office in the United States. This meant that individual subsidiaries’ industrial behavior was hardly indistinguishable from local carmakers’ (Bordenave and Lung, 2002), and in this respect can be thought of as independent companies striving to contribute earnings and growth proportionate to the local market opportunity rather meeting global targets set by the head office.

1.3 Multi-regional Growth

From the 1960s, the company changed paths and adopted a multi-regional strategy, consolidating the national subsidiaries into a more centralized structure. Under this new strategy, the company began unifying its product range, optimizing its resources, centralizing procurement and coordinating its distribution. The Auto Pact of 1966, for instance, enabled Canada to be fully integrated into the North American region. In Europe, GM had to force region integration by merging their European brands, gradually re-branding all Vauxhall cars as Opel (Bordenave and Lung, 2002).

Over the course of the...
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