Company Background
Brief History
General Motors is one of the companies that played a pivotal role not only in the development of the US auto industry but also in building the economy of the country over the past 100 years. The company is one of the largest manufacturers of cars in the United States and in the World, operating manufacturing and assembly plant as well as distribution centers in the US, Canada, and other states. The company was founded by Willian Durant back in 1908 when he invested USD$ 2000 in incorporating the company in New Jersey. The first fortune of the company was made by offering to the general public horse-drawn carriages. Under the pressure of numerous external factors and the trends in the industry, Durant gathered over 30 companies under the GM brand and differentiated his brand by selling various cars, rather than a single model, like its main competitor, Ford. This aggressive strategy made Durant leaves the company to give space to more conservative and risk adverse leaders. In 1919 the company founded its captive finance arm to support growth and diversify the risks and income channels (Reuters, 2014).
Difficult economic situation and growing number of international competitors in global automotive industry arena led to the bankruptcy of the company in 2009. Under the control of the government, the organization was able to recover and reduce its debt from USD$ 46 billion to 17.6, which allowed for higher liquidity. While GM demonstrated significant financial recovery and growth, it remains in extremely difficult position on the market. The challenges that GM faced with in 2013 and a drop in sales, market share and profit reflects a number of internal and external issues that have to be addressed immediately (Reuters, 2014).
Mission and Vision of GM
General Motors does not have an official Mission Statement. The company, however, outlines its view on making the business through their corporate website: "making the world´s best vehicles can only happen with the world´s best employees. We take great pride in our work andto deliver exceptional cars and positive ownership experience"
It is possible to outline the pillars of GM way of doing business, which includes safety and quality first; creation of lifelong customers; innovation; long-term investment value; and making a positive difference (GM, 2015).
SWOT Analysis
Conclusion
One of the major challenges for the company is the increased competition. Strong market entry barriers and growing size of the competition based on Merger and Acquisition (M&A) strategies of Ford and other rivals builds up on a number of the challenge for GM due to its current poor financial position. While the company owns several profitable brands, its overall profit has fallen from 12,6 to 7.2 over 2012-2013, which indicates the urgency of changes in its long-term strategy.
There are a number of opportunities based on the increased interest of the general public for “green” vehicles. Given the fact that GM is already operating within hybrid and electronic car market, it should further build on the investment and Research and Development (R&D) strategy for this sector.
The volatility of fuel prices and exchange rate in the global economy places a lot of pressure on already cost-intensive operation of GM. With that in mind, it is critical that Gm further focuses its efforts on the upstream operations and look for ways to reduce operational costs across its global supply chain.
Strategic Plan to Address the Issues
GM history illustrates that the company managed to build on sustainable competitive advantage and customer loyalty through offering different cars for different needs This ability to attend various market segments allowed GM to survive through the last crisis and bankruptcy. The case study outlines that in search of the optimal strategy and leadership, GM has effectively changed a number of successive leaders. Each of the CEOs over the past decade builds on the part of the revival plan. It is evident, however, that Gm lost its focus and in order to rebuild the brand confidence and enter into market share competition on the US and European market, it needs to rethink and re-present its long-term strategy to the major stakeholder groups. It is recommended that the company develops its strategy based on four pillars: Human Resource Management (HRM), Operational Efficiency, Brand portfolio reduction and Corporate Social Responsibility. HRM plan should focus on building internal competence and skills to give GM sustainable competitive advantage based on its people (Lumpkin and McNamara, 2012). Additionally, the should restructure its management net in order to add agility in the decision-making process and reduce bureaucracy within its structure. Operational efficiency should target to continuously reduce its supply chain and production costs. Reduction of brand portfolio will allow the company to focus on profitable brands, eliminate costs of maintaining loss-giving businesses and raise brand image through better brand recognition by its major customer group. Finally, "green thinking" should be a core part of CSR strategy along with the focus on alternative fuels and hybrid cars (Sadler, 2003). The above four-pillar strategy will allow GM become more innovative and respond to change.
Summary
The inside into the history of GM Company and the presented case allows building on a number of recommendations for future organizational strategy. It is evident that financial position is one of the major challenges for the brand, as the company operates a number of non-profitable brands and has the debt to equity ratio significantly higher than the market average. This further limits the organization from re-investing to the profitable elements of the business and reduces its capacity to innovate. Market share reduction in the home market as well as in Europe illustrates growing competition and GM´s failure to address the changes in the contemporary business environment (Lumpkin and McNamara, 2012). The company, however, has a great potential and market knowledge and with the right focus on HRM and cost-efficiency, GM could raise its income and improve brand image within profitable business segments.
References
Reuters (2014). General Motors and Co. Reuters Website [Online]. Retrieved 27 April 2016, http://www.reuters.com/finance/stocks/overview?symbol=GM.N
Sadler Ph (2003). Strategic Management. 2nd Edition. London: Kogan Page Limited
Lumpkin D. and McNamara E. (2012). Strategic Management. 7th Edition. New York: McGrow Hill Education.
GM (2015). General Motors Company Form 10-K. GM Official Website [Online]. Retrieved 27 April 2016,https://www.gm.com/content/dam/gm/en_us/english/Group4/InvestorsPDFDocuments/10-K.pdf
Statista (2015). The ratio of Total Debt to Equity in the United States from 3rd quarter 2009 to 3rd Quarter 2015. Statista [Online]. Retrieved 27 Apri 2015, http://www.statista.com/statistics/248260/total-debt-to-equity-ratio-in-the-united-states/
