Good Example Of General Motors Essay

General Motors Company, is a multinational holding company based in in Detroit, Michigan. The company through its subsidiaries designs, manufactures, markets and distributes vehicles, offer financial services and sells vehicle parts. The company is among the largest auto makers in the United States. In June 2009, failed to secure government loans following a recession in 2008 and 2009 and it’s got into financial problems. It filed for bankruptcy forcing the federal government to aid it in its financial difficulties. The federal government gave General Motors billions of dollars to keep it afloat. The company has been in conflict with the federal government due to some of its operations and policies. The conflict issues have been due to labor, capital, losses, and transfer of technology.
In today’s competitive and challenging global economy, General Motors has been shifting its manufacturing operations to countries that provide cheaper labor. Furthermore, these countries have set up designated areas where foreign companies can operate under certain special privileges with decreased taxes. An example of a country with a designated special privileged area is Mexico. Having close proximity to the United States has resulted in the shifting of companies to Mexico to take advantage of cheap labor. General Motors started a subsidiary company in Mexico with an aim of taking advantage of the cheap labor and decreased taxes, subsequently reducing production cost. In exporting jobs to cheaper locations has helped General Motors reduce the cost of production. Thus it able to compete favorably in the sale of cars. Having been rescued by tax payers from bankruptcy it was up to the management of the company to initiate ventures that would help reduce the cost of production returning profitability to the company. In increasing its profitability earns the federal government more revenue since it owns shares in the company. In exporting of labor General Motors is able to take advantage of cheap labor in other countries. GM has set up many of its production operation in countries such as China and India. This ensures that its cost of production is reduced and thus its cars can compete favorably. It then sell the cars produced in those countries to more affluent countries such as in North America and Europe. Consumers in those countries especially in the United States enjoy the cheaper cars.
GM has been aggressively expanding and investing in other countries. This helps the company enjoy a large pool of potential customers. General motors has a large presence in the United States but for it to expend it can not depend on its domestic market to expand. It will need to expand into other countries where the market is new and unsaturated. The sources of revenue from foreign countries can help GM survive periods of recession in some of its domestic markets. General Motors expanding market has a favorable effect on the United States economy.
General Motors earning have been reduced in recent times. The company is suffering huge loses in the foreign market compared to the home market. There is a higher decline in car sale in Europe mostly due to the recession. The recession lead losses for the company but the profits its getting from sales in United States is helping keep the it profitable. The lack of profitability in these markets has led General Motors to drop the sale of Chevrolet in Europe by the end of 2015. It will instead focus on its other car products so as to try and return the company to profitability. In addition, the company has chosen to concentrate on the production of the Opel and Vauxhall since they have a sizable market share. The loss of profits in Europe has a negative effect
General motors has brought technology and production methods into host countries such as China. Workers are been taught on the use of these new technologies and production methods. The firms in those countries benefit from these techniques and increases their production. General Motors has been involved in introducing new car technologies in other countries. It plans to introduce production of electric cars in China. This will introduce green energy automobiles in the Chinese market in a joint venture with a Chinese automaker. It will be sharing its battery and electric car technology. It will help introduce the electric cars to the local market and the Chinese can benefit from this technology. This in turn can be beneficial to the GM since its profit margin will increase.
General Motors Company aims to have most of its sales from outside the United States, in the future. It’s partly due to a gradually decreasing domestic market and therefore it needs to supplement their sales with exports. Moreover, it has been losing its market share to automakers such as Toyota and Honda Motors Co. In China, auto maker Volkswagen has started building new revamped models of their cars that they hope will rival the cars produced by General Motors. Thus could give GM stiff competition in the future.
General Motors operations are closely linked to the United States economy. Its operations are mostly aimed at increasing the companies’ profits. The company is able to meet its home requirements of paying taxes.