General Motors One of the Largest Car and Truck Manufacturer
Everyone Knows that starting up your own businessman be very scary and is very risky but the rewards can be the best feeling in the world if your are very successful. If you become a successful entrepreneur you will have many benefits like being your own boss, financial success, job security, and quality of life. In order to be successful in need to be educate yourself, be a hard worker, passionate, and a go getter. Also to be successful you have to know how a good businessmen behave. If you do not know how to behave and manage a company you will not have to much success. There is many ways to be successful including selecting a business idea without an idea you cant have a business. There are two ways of choosing a business idea first, you should find something you love to do and are good at doing. Second, determine whether your idea can satisfy a need in the market place.
Next you should create a business plan without a business plan your are setting yourself up for failure. A business plan is a document containing your goals and how these goals can be attained. Also another major form of success in a business is capital and how to find financing. Many people believe that you learn more from your failure than your success. With that being said thats why I have chosen the topic about General Motors heading for bankruptcy again. General Motors was one of the largest car and truck manufacturers for more than a century ago founded by William C. Durant on September 16,1908 which involves a vast scope of industrial activity around the world, Gm mostly focuses on motorized transportation and the engineering and manufacturing that make it possible. In 1908 GM was a holding company in Flint, Michigan. In 2012 Gm employs around 209,000 people all around the world with 396 facilities on six continents. As of 2018 General Motors is ranked number ten on the fortune 500 rankings of the largest United States corporations by total revenue. Many of the various auto brands GM produces is Buick, Cadillac, Chevrolet, GMC, Pontiac, Hummer, Saab, and Saturn.
Some of the reasons why I chose this topic is because it talks about many things I learned this semester. Some of the articles talk a lot about stockholders and how they are essential for a company to succeed. Another term in the article is marketing segmentation. This term is a process of dividing a total market into several relatively homogeneous groups. GM showed this by the type of people they were selling their vehicle to, if they were selling to people who preferred trucks over cars or smaller cars versus longer cars. Another big term talked about in the articles was the the financial market. Financial market is in which corporations and governments issue securities and sell them to the public, GM used to own a lot of the market before they started to have many financial problems. “It was just one big mistake that led GM to file for bankruptcy.
The inability to think fast and produce a different product created a big headache for everyone at General Motors.” If there was one bad decision that was the lynchpin… it would be easier to fix” says Laura Marcero, a restricting expert at Grant Thornton. “But these are systematic problems pervasive in the industry for decades.” Gm is once again losing market share, and is unable to to produce a product that can compete with other car companies like Ford, Dodge, and Toyota. In order to keep up with these big time companies you need to improve your product by upgrading parts of the product and making it better and better year after year. On July 10, 2009, General Motors emerged from government backed chapter 11 reorganization after initial on June 8, 2009. A chapter 11 reorganization is a bankruptcy code that provides the reorganization for a company to keep its business up and running and pay back creditors over a time period. In 2012 the federal government owns five hundred thousand shares of GM or about twenty six percent of the company which is a huge amount for a company not to own. In order for the company to break even it needed to get about fifty three dollars a share. Gm stock eventually closed at twenty dollars and twenty-one cents which is a huge loss. At this point he government owned about $10.1 billion worth of GM’s stock.
That being said Gm had a loss of $16.4 billion. During some time the dow Jones Industrial Average has risen by close to twenty percent which means Gm has Lost forty-nine percent of their value relative to the Dow Jones. This is very bad for GM because the Dow Jones is a very trustworthy stock market index. During President Obama’s first term of presidency he bailed out General Motors But unfortunately it doesn’t seem that Obama is willing to bail General Motors out again. A crazy statistic about general Motors is in 1960s GM averaged a 48.3%share of the U.S. car and truck market. The market share in the beginning seven months of 2012 the market share was 18% down from 20% for the same period of 2011. With these huge losses of market share comes a huge loss of relative cost-competitiveness. With Gm continuously losing market share theres only a certain amount of time before it officially goes bankrupt. One reason why Gm is losing so much market share is because of its huge competition like the Chevy Malibu. The “D segment” in the car industry is the mid-sized , popularly priced family sedans. In 2011 the D segment accounted for 14.7% of the total U.S. vehicle market. The d segment is the highest volume vehicle in the U.S. which is GM home market. It is almost impossible for GM to succeed with this kind of facts and numbers.
In order to improve and compete in the d segment, GM needed to introduce a totally redesigned vehicle. In order to succeed in the automobile industry he need to have the newest design in that segment. GM biggest problem was they would come out with a new design and it was not better than its older model or its competition, so it spend more time and money to redesign the vehicle and lose market share. Dan Akerson admitted in a speech that GM’s powertrain had not been up to par the competitors in some ways which shows by the gas milage ratings which might be one of their biggest design flaw. Also another big flaw that GM did was to reduce the wheelbase by 4.5 inches, which gave the the Malibu the shortest wheelbase in the entire d segment of vehicles. Many car companies that produce d segment vehicles are trying to produce bigger wheelbase cars for bigger room in the back and more comfortability. Chevy’s biggest slogan has always been “more for your money” but in 2012 Volkswagen Passat is now the car for your money. There is nothing that GM can do except lower the price and take years to redesign the vehicle. This is also taking up very little profitability that GM is making. The most shocking thing about General Motors going bankrupt is the fact that in 1965 GM owned about 50.7% of the U.S. market, they made $117.9 billion in revenues and $12.1 billion in profits. Just when GM command the market of vehicles Volkswagen was a small part of the market. When a business is going this bad tension starts to build up in a company and many people start pointing fingers at who’s the problems which eventually did happen.
Akerson the CEO of General Motors has been hiring and firing top GM executives. Another reason some experts thing GM has not been making a profit is because they have not filed for bankruptcy sooner then they should have. GM’s old CFO Wagoner adamantly opposed to bankruptcy he said it would drive buyers away and harm workers and stockholders, but when business fail, the law must step in to enforce good business practices. Many would think that Wagoner had bad business ethics because he did not file for bankruptcy because it would harm customers, workers, and stockholders. Business ethics is very good to have because many people will want to do business with you. If you don’t have good business ethics many people wont want to do business with you and you will not making any money what some experts say happened to GM.Filing for bankruptcy in 2005 while the economy was good and the business was doing good, it would of been able to cope with the job losses and stockholders selling their stock. During the 9/11 terrorist GM attacked very fast and smart by adding incentives, 0% financing on loans up to five years. After those five years when the deal wore off automaker piled on $3,000 rebate. Another huge reason General Motors was not making any profits is because they overreacted to the high profit truck boom. In the 90’s GM realized a ton of people were switching over to trucks rather than a sedan. GM overreacted too much putting way to much time and money into the trucks that it overcommitted on trucks. GM became to overcommitted to trucks and eventually the market switched back over to cars and Gm ended up with pricey trucks that did not sell. Some reason why the some consumers did not want truck anymore because it wasn’t the style, the trucks were to pricey, and the fuel prices hit records in 2008. With not many miles to the gallon and high gas prices gave the trucks a bad reputation for the environment. A bad reputation on the environment will scare away many customers.
After hearing about all of these negative and bad business decisions, you ask yourself how can a company ever get out of so much debt and become profitably again? Many experts believed it would decades to start making profits again but Gm did it in less than that. Well General Motors answered that question a decade after the financial crisis General Motors is led by one of the best management team its ever headland one of the best C-suites in all of business.By doing this they hired a whole new management team, they hired the right people to succeed. Most of all of these new changes of success are coming with new top executives, which goes to show you that it starts from the top down. If the top is not executing either will the bottom, so with good leadership and a good mindset any thing is achievable. The top executives showed everyone that if you know how a good businessman behaves you can have success. After that they changed the culture of the company. Barra an executive in GM stated “to change a culture you have to change behaviors. Its not what you say, It’s what you do. This is very important in a company because with the wrong mindset you will not be able to succeed like the GM in the late 2000s. Before, GM’s 2009 bankruptcy ,GM was know for internal conflict, but the company is now a model of cooperation. Since the bankruptcy of General Motors it has been one of the most impressive turnarounds ever. GM has made billions of profits, and is now preparing 20 new and improved electrified vehicles for the future. Gm’s turnaround is one of the best years in 2015 in the auto industry.
American carmakers sold 17.47 million cars in 2015 surpassing the record in 2000 for 17.41 million. In April of 2018 GM had reported very good first quarter earnings. Although the adjusted earnings per share declined on a year-over-year basis from $1.75 to $1.43 but still surpassed the average estimate of $1.24. GM’s management has said that the earnings are set to improve later in the year and in the future. GM stock has still been shaky though. Their stock has continued to decline following the earnings report. GM is expecting a stronger quarter two and three earnings. Also the International markets are helping while trends in North America are going well GM could gain more earnings from its international operations. Gm International operation in had a loss of nearly $651 million in 2017 which has hurt General Motors stock performance. There performance is now doing much better with South America improving due to company cut cost and better macroeconomic conditions. GM biggest international operation is Korea subsidiary.
By closing its Gunsan manufacturing plant and restructuring its labor contracts GM expects to achieve annualized cost savings of $400 to $500 million by the second half of 2018 which is helping out GM’s sales by a lot. Some experts on Wall Street 2019 are expecting 2019 earnings per share to be better than 2017 and 18. One way GM will do this is from benefiting from higher truck production and improved product mix. Secondly it is continuing to expand its lineup of crossover, which have higher margins than cars do. Also Gm still expects to improve its international profitability. Lastly, Gm finance is steadily gaining scale, which is helping GM’s profitability a lot. One of GM biggest flaw that made them go into bankruptcy was the fact that they didn’t redesign at a fast enough rate and when the did redesign they were not competing with other automobile companies. The new chief executive officer Dan Akerson changed that problem by making GM one of the fastest redesign rate in the car industry. GM know has the ability to replace almost twenty-four percent of its sales volume each year with new and improve models. Also Gm has changed some of its focus to another demographic. GM is focusing a little more time on the luxury market by making the Cadillac more pricy and luxurious. The luxury market is where many other automobiles companies make a good amount of profit.
Lastly another way GM is succeeding is they are working for the future years. Since the rise of oil prices and the fuel efficient cars, GM has moved their focus to the clean energy electric vehicles. Doing this will help GM’s profits because many people are tired of buy over priced gas and trying to save the environment, so they want to switch over to electric vehicles. Which is one reason why one of many GM’s vehicles failed the Hummer. Hummer failed because of the lows mileage. With that being said GM is thriving today because they started to raise the gas mileage on every vehicle because no one likes paying for expense gas every couple of days. Many people will buy a vehicle with more gas mileage so they don’t have to purchase the gas all the time. Lastly , one of the new reasons why GM is succeeding now is they are dominating the Chinese market. China is a great market to be dominating because it is rich and densely populated. The market grew from 640,000 units in 2000 to close to over 11 million in 2010. That is a remarkable amount of sales. It is truly remarkable to see how top executives can really turn around a company that was billions of dollars in debt. One of the many female CEO Mary Barra is a major part of the success for General Motors. Barra really changed the company around from the ground up. Barra changed mostly everything about the company for the best. Before Barra GM was know for its internal conflicts which is a major problem in a business, and that was one of the first things she changed about the company. Some of the conflicts that GM had before the take over of Barra was the top of the divisions always fighting about finances. If there is conflict in a company the business will not run smooth and probably not succeed in the way Barra wants it too.
In conclusion, if you understand how a good businessman behaves you will be very successful for instance before Mary Barra became the CEO of General Motors it did not look to good for GM with many internal conflicts and billions of debts there looked like there was no way out of it. But Barra understood how to manage a company with much experience and knowledge she brought General Motors a company that was in billions of dollars in debt to a company that is making billions of dollars in profits. One of the reasons why I chose to write about this topic because it gained my interest and focused on a lot of the material I learned this semester. Including: stocks and stockholders, the market share, market segmentation, and business ethics. I really found this topic to be very interesting because General Motors was going bankrupt and no one thought they would be able to get out of that situation, and the crazy thing is they did. I found it very remarkable that the top executives were able to get a company out of billions of dollars into debt to be one of the top automobile sellers in the world. I think it is crazy that a simple management change can change a whole companies fortune. I believe that Mary Barra the CEO of General Motors is one of the bets female CEO’s in the world. In order to do what they did at GM you need to have many traits of a good business man. For example, many of the best most successful business man are very similar they all have a positive attitude, great vision, high energy level, the need to achieve, self confidence and optimism, tolerance for failure, creativity, tolerance for ambiguity, and finally internal locus of control. Obviously there are many more great attributes of a good entrepreneur, but these are the most common of a successful business man. Barra and her management team also had a really good business plan what drew out their goals and financial projection. Taking Intro to Business really helped me understand a lot about the business side of the world.
Which will be very helpful later in life because one day I wish to be a very successful entrepreneur and run a well managed company. I believe one day I will be able to do such a thing because of the ample amount of material I learned this semester. I think Business should be taught to everyone because in todays world everything is about business and how things run. I also think it makes you thing in a different way that you normal wouldn’t think. For instance I really never understood the side of the shareholders and stock I never knew what a common or preferred stock was or how it worked, but after these course I know that a common stock give owners the right to vote but only residual claims to the firms assets and income distributions, and that preferred gives the only limited voting rights and they get their dividends before the common stock. There are a bunch of terms that I learned this year that really helped me improve my understanding of how businesses run. Therefore I believe this class was very beneficial to me in many positive ways because I learned so many things that I never thought I would ever imagine I would know about a business. If I didn’t take this course I don’t thing I would ever know where to start when learning about the business side of things and how to behave and manage a company. Therefore, I learned many things from this article about how General Motors made many mistakes and how they became very successful.