General Motors Also Known as GM

General Motors also known as GM is one of the big three car industries in the country along with Ford and Chrysler. They are known for trailblazing and innovating new technology before their competitors. At an age of one hundred and ten years old they have come a long way and grown a lot as a company. They have overcome some steep challenges over time and grown from each issue they faced. Today we will be addressing some major issues with GM that have caused a ripple effect with the economy as well as some of the positive outcomes that have transpired.

Our hope is that after reading this you will have gained further knowledge of GM’s trials and tribulations.

General Motors is the first auto company to effectively innovate cost efficient electric cars. They have also been taking innovative strides to create self driving cars. Not only have they innovated technology, but they have innovated the way of production to reduce pollution and decrease their environmental footprint (GM.com/About GM). With popular brands such as GMC, Chevrolet, Buick, and Cadillac, it is surprising that they have undergone such hardships over the years.

However, even through tough times they still give back to the community. They are headquartered out of Detroit, Michigan. Where they give back to their community through funding STEM education as well as community development and vehicle and road safety. STEM stands for “Science, Technology, Engineering, and Math” its educational program designed to get students who excel in those areas ahead, and better prepared for the future. Which will benefit them in the end because this creates potential candidates to employ in the future. Overall, General Motors is a strong innovative company that has had some hard times.

General Motors Mission Statement: “G.M. is a multinational corporation engaged in socially responsible operations, worldwide. It is dedicated to provide products and services of such quality that our customers will receive superior value while our employees and business partners will share in our success and our stockholders will receive a sustained superior return on their investment.”
General Motors Vision Statement: “Over the past 100 years, GM has been a leader in the global automotive industry.

And the next 100 years will be no different. GM is committed to leading the industry in alternative fuel propulsion.” “GM’s vision is to be the world leader in transportation products and related services. We will earn our customers’ enthusiasm through continuous improvement driven by the integrity, teamwork, and innovation of GM people.”

General Motors overall goal is to create products that are safe and eco friendly. As well as continuing to innovate and trailblaze their technology. They want to find ways to be cost efficient yet, prosperous for their company as well as their stockholders. General Motors has their focus on innovative technology and they have big plans for the future which will be further explained later on. It is clear that GM has a future driven vision. However, with minimal focus on the past and current issues it is clear to see why they have been struggling over time.

While innovative technology is an important aspect in maintaining their edge on the competition it is important to be aware of current issues to better prepare for them. Some major rippling hardships could have been avoided had GM paid attention to history and aware that it has a funny way of repeating itself. A company as strong and innovative as GM should know how to prepare for issues that can develop when preparing for the future. Now let’s discuss some of the issues that have had rippling effects on not only GM as a company and it’s employees, but also the economy.

Issues. During the recession there was a major decline in automotive sales, so in 2008 General Motors had a decision to make. They could either go bankrupt, forcing millions of people to lose their jobs or they could turn to the government for a bailout, which is exactly what they did. Though they could have gone about it better.

Ford didn’t need a bailout due to budget cuts, and as stated earlier had GM paid closer attention to the decline of sales they could have been prepared as well. They even went as far as flying their private jet to Washington, to ask for money. Asking for money became a recurring issue for GM from 2008 to 2014 as they attempted to climb out of their debt. Though this was a rough time for GM some good did come from it.

Over 341,000 employment opportunities stemmed from government intervention (The Balance, Auto Industry Bailout, The impact of the Bailout on the U.S. Economy). The Government had some stipulations set into play. According to the Balance: President Obama, enforced new standards for auto efficiency which actually improved the air quality (The Balance, Auto Industry Bailout). GM’s greatest downfall was losing their competitive edge and only looking to the future. After the bailout GM began to recover and went back to business as usual.

As stated earlier history has a way of repeating itself. Just yesterday NBC news stated that General Motors is cutting over 15,000 jobs after Trump claimed that he planned on cutting subsidies. It is extremely unfortunate to see so many people at risk of being out of work. However, at least GM is taking strides to avoid another risk of bankruptcy. They also talked about General Motors moving jobs around so that their employees aren’t out of work, and they can focus on more important aspects of the company. Overall, it is safe to say that doing so could create more opportunity for future innovation.

While General Motors did face many issues, not all of their business decisions were bad. Looking at the company through the SWOT Analysis will analyze General Motors strengths, weaknesses, opportunities, and threats. As one can imagine, a company as large as General Motors had developed many strengths in their 110 years of doing business. They do sales in over 35 countries around the world and employ over 200,000 workers worldwide (Economist, 2009).

They also hold one of the top spots for automotive market share in the United States. Their prominent brands, such as Cadillac, GMC, Chevrolet, and Buick, have created a strong brand loyalty among consumers that has consistently allowed General Motors to grow. Their focus on marketing has also pushed them to be one of the most well-known American companies. Emphasis on the fact that their cars are American made resonates well with consumers who want to directly support the United States economy.

As detailed above, General Motors is not without fault for their bankruptcy crisis. Many weaknesses contributed to the fall of their success. First, General Motors did not file for bankruptcy soon enough. According to Marin Weiss, president of Weiss Research, if they would have filed for bankruptcy in 2005 when they initially began to fail, “they could have been leaner and meaner to prepare for the tough times that were coming” (Carty, 2009).

Another weakness General Motors has was offering too many incentives and heavy deals that dominated their marketing promotions, when in fact, the actual cars should have been the focus of almost all marketing. In some cases, General Motors was offering rebates between $6,000 and $8,000 dollars and it was not until 2006 that they realized these constant deals were damaging the company (Carty, 2009). However, once they offered them, they were stuck and could not retract them because General Motors competitors were also continuing to offer rebates. If General Motors wanted to stay competitive, they had to continue to offer deals as well, whether they could afford to or not.

Another major weakness of General Motors was the decision to shut down their program that developed technology for electric cars. At the time, General Motors did not realize how large of an impact this would have on their standing in the race for electric cars. Because they abandoned their lead in electric car technology, Toyota was able to take over and produced a hybrid version of their popular Prius sedan. In 2006 General Motors made one of their largest mistakes.

They owned a financing company known as the General Motors Acceptance Corporation (GMAC) that they sold 51% of to a private-equity fund for $7.4 billion (Carty, 2009). This was a dreadful business decision for the company. GMAC was known as the financial strength of General Motors and was considered to be a “cash cow”. Keeping control over GMAC could have provided major assistance during their companies downfall.

More poor financial decisions included the purchase of a 20% share of Italian automaker company Fiat for $2.4 billion. When the CEO of Fiat, Gianni Agnelli, passed away the automaker experienced a steady rise issues. Instead of continuing the deal with Fiat, General Motors chose to pay $2 billion to walk away (Carty, 2009).

The last major weakness of General Motors was the decision to focus most production efforts on SUVs. In the 1990s, many consumers were switching to SUVs. General Motors overreacted and saw this as an opportunity for sales. They poured a great deal of time and money into expanding their line of trucks. However, when the economy crashed and fuel prices hit a record high of $4 in 2008, General Motors ended up with an excessive amount of high priced SUV models that they could not sell (Carty, 2009).

Continuing with the SWOT Analysis, General Motors was presented with two major opportunities throughout this crisis. The first being rewarded with federal funding in order to stay out of bankruptcy. In the end, they still ended up having to file for bankruptcy but they were given over $60 billion in federal aid to help rebuild their business (Bigman, 2013). The second opportunity that arose out of this tragedy was the chance to rebrand their company.

According to statements made by Jay Alix, one of the most respected experts on corporate bankruptcy in America, research shows that once a company enters bankruptcy, their consumer confidence crashes. Essentially meaning no one would want to buy a car from a company that was bankrupt. Because of this, General Motors would be required to completely rebrand their company upon survival from the crisis.

This would give them the opportunity to create a fresh image of the company in the consumer’s mind and allow them to create a better version of the strategies General Motors previously implemented. The last analyzing factor in the SWOT Analysis is the threats. At the time that General Motors was forced to file for bankruptcy, the United States economy was experiencing the worst economic downturn since the Great Depression. Car sales were on an extreme decline and by the end of 2008, General Motors was $30.9 billion in debt (Bigman, 2013).

Fit analysis looks at ideas and considers whether they are compatible with the organization’s business definition, capabilities, and resources. General Motors’ corporate mission/business definition is “to earn customers for life by building brands that inspire passion and loyalty through not only breakthrough technologies but also by serving and improving the communities in which we live and work around the world.” (Kissinger, 2017).

Their capabilities include almost anything marketing wise, because they are a multibillion dollar firm. Their position as a leader in the automotive industry and high level of brand loyalty gives them the capability to try almost anything. Their resources were obviously limited at the time of the crisis because of the extreme amount of debt they were in. These three factors, business definition, capabilities, and resources, allow us to analyze the ways General Motors ideas were not a good fit at the time.

Considering their lack of financial resources in 2005, General Motors should have never decided to pay Fiat $2 billion to walk away from a deal. Because of the deal they initially made, Fiat had the right to force General Motors to buy the remaining shares and take control over the company. It is understandable that General Motors did not consider the unforeseeable event of the CEO of Fiat passing away, however the details of the deal were irresponsible on General Motors part. Agreeing to a clause that essentially required General Motors to allow themselves to be forced to take control over Fiat, was a horrible business decision and could have been avoided with a rework of the deal.

An idea that did not fit with General Motors capabilities was the decision to remove their program that focused on electric car technology. One of their major goals was to be the leader in the electric car market. Because General Motors is such a large company, they had more than enough capability to make this happen. They had the brand loyalty they needed and were already in the process of producing the necessary technology.

This decision caused a major setback in terms of their electric car market share. The environment surrounding General Motors at the time was a horrible fit for their business definition. Because of the major economic downturn and a recession that was the worst since the Great Depression, General motors did not have the funds to provide breakthrough technology and were not able to serve and improve communities, as stated in their business definition.
Data analysis also helps us critically view the ways in which General Motors actions led them to bankruptcy.

The first piece of data is the fact that General Motors was the largest automotive company to ever file for bankruptcy (Kaufman, 2009). They declared more than $82 billion in assets. To put this into perspective, this is more than double of what Chrysler reported when they filed for bankruptcy (Edmonston, 2009). General Motors also has close to 235,000 employees. This number is nearly 10 times the amount of employees Lehman Brothers Investment Co. employed when they filed for bankruptcy (Kaufman, 2009). The chart included shows the largest U.S. bankruptcy filings.

General Motors also received over $60 billion in assistance from the federal government in order to aid in the reconstruction of their company. Other data includes the price of fuel and how this impacted truck sales after General Motors focused so much time and resources on the production of SUVs. Gas prices were up to $4 per gallon, which resulted in truck sales dropping to 35.5% lower in December of 2008 than they were the year before (Economist, 2009).

While gas prices change every day, there are factors and studies that help predict these fluctuations. If General Motors had used these predictions, they would have determined that during economic downturns, fuel prices increase. At the time they began producing SUVs on a larger scale, the United States economy was already showing signs of decline.

General Motors has four automobile brands, Chevrolet, GMC, Buick, and Cadillac, allowing GM to target many different markets worldwide. Firstly, Chevrolet has a wide range of vehicles available, for this reason they specifically target middle class consumers of all ages and genders, depending on the car (“General Motors Marketing Mix (4Ps) Strategy”).

GMC trucks also target middle class consumers, but in a slightly different way. GMC trucks are built to be tougher than Chevy trucks and for this reason they are marketed more towards commercial use. When GMC trucks aren’t being marketed towards commercial use, they are targeting upper middle class consumers that want and can afford a truck that’s overall stronger and has a better transmission (Lutzenberger, 2017).

Buick markets itself as an entry level luxury car brand. They target middle and upper middle class consumers that are looking for a car that has the look and feel of a luxury car, but at a slightly more affordable cost than most high ends cars (Yvkoff, 2015). Because of the lower price point, Buick is also targeted to a younger consumer base (Buss, 2016). Lastly, GM owns the luxury car brand Cadillac. Cadillac’s are marketed for upper middle class and upper class consumers. Their primary buys are older adults that are 50+, though GM is attempting to market Cadillac towards a younger market (Gaille, 2015).

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