Introduction
Indubitably, General Motors Company (GM) is one of the largest vehicle manufacturing companies in the world. Currently, General Motors employs over 325,000 people around the world. Although headquartered in Detroit, General Motors has over 120 branches in different countries, 31 of them being manufacturing centres.
Primarily, General motors and its strategic partners manufacture vehicles but sell them in diverse brands such as Opel, Isuzu, Chevrolet, Holden and many more to interested buyers all around the globe. According to the recently released statistics from GM’s department of logistics and supply, China tops as the biggest market for GM’s products.
Other major market places include countries in the European Union such as Germany, France, Russia and United Kingdom. Traditionally, the automotive industry has employed a business model of mass production where automotive companies rely on mass production for competition.
Providentially, this was the then fortitude of competition. However, as time went by, the mass production of vehicles from other automotive manufacturers such as Toyota and Ford became irrelevant. On the other hand, demands and expectations from customers intensified forcing many manufacturing companies to reconsider their logistics and supply chain management.
The paper is an executive summary of General Motors Company and will specifically look into the past successes and failure, current economic and financial situation, and economic and financial future (Cooper 1).
Past Successes and Failures
Since its foundation in 1908, General Motors grew form a small holding company into a leading manufacturer of motor vehicles. During this period, General Motors experienced a number of successes and failures. The road to GM’s success started in 1908 when its founder, William Durant, devised ways of expanding the horizons of the company.
However, the company was one year later plunged into financial distress that threatened its collapse. Since most American businesspersons had seen the business idea of GM, some bankers pumped financial resources into the company thus, preventing its collapse.
The company was again back on its feet, and in 1911, it entered into the international market by making sales outside North America. Durant who had been ousted from the company he founded, moved on to create another company, Chevrolet, which enables him to come back to General Motors in 1915. History categorically states that GM started growing hysterically.
During this time, GM sold the highest number of Cadillac vehicles, and in 1918, GM acquired another motor company, Chevrolet Motors. The economic recession of 1920 caught the company by surprise and Durant was again affected as he found himself outside the ranks of General Motors Company.
Nevertheless, the financial boom of 1920s helped the company to regain back setting another success mark. The number of auto sales hit 4.5 million mark, and by this time, the company started competing with other giant automakers such as Ford and Chrysler. At the helm of GM’s hierarchy was a brilliant engineer and marketing genius, Alfred Sloan, who led the company to outdo the then successful automaker, Ford.
Although Ford had been successful in those days, its philosophy being to “offer customers product equivalent to the value of their money”, it offered little variety. GM under the leadership of Sloan, capitalised on this weakness by coming up with products of different stylish colours, features and comfort. Eventually this became the new motto of the company.
Additionally, the company unleashed a brilliant offer into the market where the public took products on credit. This offer in addition to the looks and styles of the five brands of GM (Cadillac, Buick, Oldsmobile, Pontiac and Chevrolet) increased the number of sales, and GM eventually overtook Ford from the number one spot.
However, another failure came in 1929 during the great Wall Street Crash forcing GM to abandon all of its expansion programmes. Notably, stocks of GM in major trading exchange centres fell terribly. Three years later, the company found itself rolling again and to mark its return, GM bought the Yellow Coach bus company and Electro-Motive Corporation, which enabled the production of diesel locomotives.
In 1955, GM became the first automaker to make over a billion dollars as revenue. Other successes include GM being the largest corporation in United States at one time and the greatest employer in the world at specific times.
On a sad note, GM was recently hit by financial woes that saw over 30, 000 employees leave their positions in addition to $4 billion losses. However, the Obama administration has poured in excess $30.1 billion into GM to help it regain.
Current Economic and Financial situation
The current global economic and financial crisis has always posed a serious dilemma to many companies including GM. Currently, the revenue stands at $193 billion, meaning GM is standing at the crossroads. Although 30, 000 employees no longer work for the company, the company pays $8.7 billion as wages.
This means that that if GM shuts its operations, over 1 million jobs it supports will also be lost, which is a big blow to the economy. For instance, the 1988 labor industrial action that shut GM’s operations for 54 days had serious negative impacts to the economy of US. All is not well at GM, for example, in the first quarter alone of the year 2009, the company made a loss of $1.1 billion.
The $1, 600-per-vehicle legacy costs also threaten the operations of the company, and soon, the consequences of junk-bond ratings might affect it further. Since the year 2000, the company has continually lost its market value (43 billion) – currently stands at 74 percent. This has scared away investors as GM no longer enjoys its fundamental business—that of selling cars.
The huge losses incurred means that GM cannot afford to invest more in technology and design. This has resulted into a decline in sales by 5.2 percent in United States alone. The market-share has declined to its lowest in four-decade history to 25.6 percent. For the first time in the history of the company, the total expenditure is higher compared to the total revenue generated from car sales (General Motors Company 8-20).
Economic and Financial Future
The US government took measures to halt the further collapse of GM. By injecting $30.1 billion into the company, the company is now emerging from bankruptcy. 17 months down the line from June 1, 2009, GM started trading its shares again. Additionally, the company has marked major changes to exude confidence in the market.
Dubbed the new GM, the company/s main objective is to rejuvenate the number of sales through anew business model. Over the next five years, the company plans to lower cost structure, develop an ambient balance sheet and minimize risks. Moreover, the company intends to enter equity market and register its mark in the NYSE balcony.
GM has also collaborated with other business ventures internally and externally in Brazil Russia, which has seen robust sales of all brands. Additionally, at the start of 2011, the company came up with new design vehicles Chevrolet Silverado HD that has since won the Motor Trend Award.
By reducing cost base and restructuring operations in North America, GM has announced revenue of $5.7 billion before tax. Additionally, the company has managed to cut its debt by $11 billion, injected over $4 billion cash contributions into the pension plan, and continues to maintain a strong liquidity position.
Advanced technology, improved customer relationship through dealer networks, and financial discipline are the long-term strategies of building the new GM (General Motors Company 22-288).
Work Cited
Cooper, Victoria. General Motors Profile: Driving Customer Satisfaction. 2010. Web.
Motors Company. 2010 Annual Report. 2010. Web.