General Motors Case Study
How it works
History: In New Jersey, in 1908, the world’s largest automobile manufacturers, General Motors, was founded by William Durant. General Motors was created to “consolidate several motorcar companies such as: Buick, Oldsmobile, Cadillac, Oakland (later Pontiac), Ewing, Marquette, and other autos” (General Motors). During 1910, William Durant lost control of the company due to debt, gained it back in 1916. Only to end up losing it again in 1920, because America was hit by the power depression. This caused William Durant to go bankrupt, which led to Alfred P.
Sloan Jr. becoming the president of General Motors during (1923-1937), and then chairman of the board of directors in (1937-1956) (General Motors). Sloan reorganized General Motors into five main automotive divisions Cadillac, Buick, Pontiac, Oldsmobile, and Chevrolet. In 1929, General Motors surpassed the Ford Motor Company, and became the leading American passenger-car manufacturer (General Motors). General Motors added overseas operations in Vauxhall of England in 1925, in Adam Opel of Germany in 1929, and Holden of Australia in 1931.
“In 1931 General Motors became the world’s largest manufacturer of motor vehicles. By 1941 it was making 44 percent of all the cars in the United States and became one of the largest industrial corporations in the world” (General Motors). Because of the competition General Motors had with Japanese automakers they began a new automotive division called Saturn in 1984 (General Motors). In 2008, “General Motors was surpassed by Toyota Motor Corporation as the world’s largest automaker” (General Motors). As of January 15, 2014, Mary T. Barra has been the Chairman and Chief Executive Officer of General Motors. She is also the first woman to take over a large automobile company. Challenges:During 2014, General Motors faced the gravest safety crisis in the companies history. “General Motors issued a record 84 separate recalls in the United States involving more than 30 million cars, 2.6 million of which had a problem with defective ignition switches that could shut down engine power and disable airbags” (Dess, C239). “General Motors had to make compensation offers to the families of 42 people who had died in accidents in vehicles with defective switches, as well as more than 50 people who were injured” (Dess, C239). General Motors continued to deal with the repercussions of the safety problems that it failed to address. In 2016, General Motors was facing several investigations, including a federal trial that would deal with several lawsuits against the firm. General Motors failed to inform The U.S. Department of Transportation of the ignition switch defect in a timely manner, because of this General Motors got hit with $35 million penalty. In June of 2014, internal reports released that General Motors “faulted a lack of responsibility and accountability at the firm for its failure to recall defective cars for years after it had learned about the faulty ignition switch” (Dess, C239). Richard Wagoner took over General Motors in 2000, “he carried out three major restructurings, eliminating dozens of plants, tens of thousands of jobs, and hundreds of dealers” (Dess, 240). Richard Wagoner became short of funds and turned to the U.S government for loans.
“The Bush Administration gave General Motors a loan of $13.4 billion to help through the crisis General Motors was facing” (Global Cars Brands). Richard Wagoner was replaced by “Frederick A. Henderson, who had been President and Chief Operating Officer of the firm for General Motors since 2008” (Dess, 240). In 2009 “the Obama Administration forced General Motors to shut down and numerous conferences and meetings were held (Global Cars Brands). In late July of 2009, General Motors had to seek chapter 11 bankruptcy protection. After that, General Motors “was led by two different board members, Edward E. Whitacre, Jr., ran the firm for about a year before being replaced by Dan Akerson” (Dess, 240). Akerson was appointed by the U.S. government following the General Motors bankruptcy. General Motors was finally able to move past bankruptcy in 2014, and Akerson was replaced by Barra. General Motors then began to face issues with the number of brands of vehicles it offered and cut cost by cutting out four of its brands Pontiac, Saturn, Saab, and Hummer. Over the decades General Motors has faced a series of bankruptcies, new board members, and recalls.SWOT Analysis: Swot analysis is one of the basic techniques used for analyzing a firm and their industry conditions. It is utilized to help firms target and understand their strengths, weaknesses, opportunities and threats. “First, it forces managers to consider both internal and external factors simultaneously. Second, its emphasis on identifying opportunities and threats makes firms act proactively rather than reactively. Third, it raises awareness about the role of strategy in creating a match between the environmental conditions and the firm’s internal strengths and weaknesses. Finally, its conceptual simplicity is achieved without sacrificing analytical rigor” (Dess, 42). General Motors has several strengths that have helped them to be a successful company over many decades. The following strengths General Motors have are: Strong Brand Image: General Motors has several well-known brands that it owns around the world that have a strong image, such as Chevrolet, Cadillac, GMC, Buick, etc. These brands help General Motors strengthen their competition with other brands. General Motors has a long list of customer loyalty based on the reliability and attractiveness of these brands. Global Presence: General Motors vehicles are present globally. General Motors produces vehicles in 37 countries under thirteen different brands.
General Motors maintains business presence in other countries, “such as Isuzu Truck South Africa, General Motors Egypt, India, Uzkeistan, Ghandhara Industries in Pakistan, etc” (Global Cars Brands). Every company has weaknesses, and General Motors is very familiar with their weaknesses. They have worked hard over the years to improve on them. The following weaknesses General Motors have are: Product Recalls: As previously stated, General Motors has recalled numerous amounts of vehicles before due to defective ignition switches. Because of these past recalls the brand image of General Motors has been affected negatively. General Motors always has opportunities arising. These opportunities are what will help General Motors grow. The following opportunities General Motors have are: Increasing demand for Hybrid Electric Vehicles: Hybrid Electric technology is still new to the market which will give General Motors a chance to compete and become a global leader. Two of the well known hybrids General Motors provides are the Chevrolet Malibu Hybrid, and the Cadillac CT6 plug-in Hybrid. New Models: General Motors are always working on ways to update their products with the latest technology, due to the fact that what is popular today might not be popular tomorrow. General Motors works hard to stay up to date with the latest trends in order to exceed customer expectations as well as sales, and revenue to keep the company growing. Businesses will more than likely encounter threats from time to time. General Motors is aware of the threats they have encountered and may still yet encounter in the future. The following threats General Motors have are:Rising Competition: The competition has continued to rise in the auto industry. General Motors has many competitors such as Toyota Motor, Ford Motor, Honda Motor, Daimler, Hyundai Motor, Nissan Motor, etc.
As stated earlier, Toyota is currently ahead of General Motors as number one in the auto industry.Threatened Brand Image: The various recalls that General Motors has faced over the years has threatened their image. Not only has it affected their image, it has also affected their sales. Customers’ are taking their business to other auto companies. Conclusion: General Motors continues to work hard to make improvements and try to stay on top of the auto industry. They have improved financially over the years since the recession. General Motors has released new models and continues to stay up to date with trends to increase their sales as well as customer loyalty. General Motors has the potential to be number one in the auto industry again as long as they keep striving to be better and work harder. Porter’s Five Forces will be a good tool to help General Motors. Porter’s Five Forces would help them identify any factors that will affect the firm’s ability to compete. The five forces include: The threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products and services, and the intensity of rivalry among competitors in an industry. Using Porter’s Model would allow General Motors to gain a better understanding of their status as a company and to make the necessary changes in order to continue being successful in the auto industry.