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General Motors was founded by William Billy Durant on September 16, 1908, at the turn of the 20th century there were fewer than 8,000 automobiles in America, many of them are powered by either steam, electricity or gasoline engines. At creation, GM held only the Buick Motor Company, but in a matter of years it would have owned more than 20 companies ranging from Oldsmobile, Cadillac, and Oakland, which is known as Pontiac today. In 1899, Opel entered the growing automobile market. They became part of General Motors thirty years later
Demands for auto mobiles rose rapidly during the 1920s , General Motors were the entrepreneurs in their production, design, and marketing lines for vehicles. General Motors further diversified their selection of vehicles by adding brands like Chevrolet, Vauxhall and Opel. Living up to their philosophy and strategy of "a car for every purse and purpose,"
Instability in America and a political change in Europe throughout the 30s brought new uncertainty, but GM's stayed true to their commitment of innovation. They produced a string of well-known designs such as the 1949 Buick Roadmaster, the Chevrolet Corvetter and BelAir, and the 1959 Cadillac El Dorado
In 1971, GM pioneered the use of engines that could run on low-lead or unleaded gasoline. General Motors was also the first to offer an air bag in a production car. In 1974, GM introduced the most important step in reducing emissions with the catalytic converter. This technology, shared by General Motors, is still used by the entire auto industry. General Motor's decision in rushing to develop smaller vehicles but due to its success and scale GM is unable to change direction easily which causes its undisputed dominance of the U.S. market to erode.
In 1995, annual sales for vehicle outside North America exceeded three million unit and five million vehicles were sold in the United States too. GM also entered into its first joint venture in China. By the end of the 90s, the foundation for global growth in the new millennium had been set. During this period, GM also formed NUMMI, a joint-venture with Toyota, and Saturn, a new company focused on creating new small car and new ways of doing business.
Innovation & Challenges 2000-2008
The creation of GM Daewoo in 2002 gave GM a new organization specializing, engineering and manufacturing smaller cars, proving an important boost to Chevrolet's growth as a global brand. The design and quality of GM's new cars improved significantly, but GM found it difficult to regain share from its offshore competitors. This continued to weigh on its financial results. However, in 2008, a major recession and global credit crisis drove car sales to near depression levels and dried up private sources of capital. GM,being critically short of operating cash, received help from the U.S.Treasury in the form of a bridge loan, under the conditions that the company further accelerate a tough restructuring of its us operations that had been underway for several years.
Rebirth: 2009 - Present
"General Motors Corporation filed for bankruptcy on June 1, 2009", and "a new General Motors Company was created July 10, 2009" acquiring many of the strongest assets of the old company. With the U.S. Treasury, Canadian governments, and the UAW Retiree Medical Benefit Trust as its major shareholders. The new created General Motors is smaller and leaner company than its predecessor but it have four brands in the U.S.: Chevrolet, Buick, GMC and Cadillac and a more focused network of 4,500 dealers and competitive labor agreements with its unions.
The fall in car sales has been a problem due to rising foreign competition and soaring oil prices. In addition, U.S economic crisis as well as Europe's economy falling into recession due to debt crisis pulled down their sales even further.
Macro Environment Situation
It had been found out that the global financial crisis affect the buying behavior of the customers, because customer tend to buy important things. On the other hand, due to the growing awareness of people towards health and the environment, people tend to substitute motor cars with more environmental- and health-friendly mode of transportation including walking and cycling, and public transportation, which not only help to save money in gas, lessen air pollution, but also push people to be physically active. (Ref : http://ivythesis.typepad.com/term_paper_topics/2011/02/macro-environment-and-industrial-factors-affecting-the-motor-car-manufacturers.html)
- laws and government regulations affect the gm since the year they start at 1960s
- regulations from consumers concerns for the environment and safer of auto mobiles.Â
- according to varies studies, gm has the largest impact on every country's economy. in this industry mainly useÂ
computer chips, textiles, metal like copper, steel, iron, lead and other material are plastic, vinyl and rubber.Â
this means when gm need more raw materials from other industry, gm is creating more jobs and opportunities for other related industries.
- It has been a rising trend where people are judged on their status with the cars they own.
Gm have strategized their sales and marketing to meet the various consumers needs and wants, with cars appealing to the different society levels , each trying to appeal to them with posh interior/exterior designs of their vehicles.
- with the technology of the internet, Gm started investing more money on their marketing done on the internet. They posted their products online and saw a drastic increase of buyers.(27,000 more buyers then the previous year). Recent research showed that 60% of Gm's buyers first researched about their ideal cars through the internet before going down to the showroom for the test drive. This proves that the internet creates more opportunities then their previous ways of marketing.
-Product not Competitive
-Decrease in sales
-Diminishing dealer network
-Inadequate performance among some business segments
-Low debt ratings
-Growth potential in India and China
-Rising demand in hybrid vehicle
-Increased global truck market
-Soaring oil prices
-Weakness in Global Auto mobile Industry
Analyse General Motor Decision Making MethodsÂ
Chief Executive Frederick "Fritz" Henderson adopted strategic management decision making . Decisions that are made by company top management . The company was firing a massive number of senior positions and even disbanded two committees of top executives to cut cost for the company operations . He expected hundreds of middles managers to leave the company . General Motors was plunging to bankruptcy and they have no choice to auction the Hobbit House in the foreclosure of Shire Village .
Ultimately General Motor filed for bankruptcy with a total of 27 billion in unsecured debt . This includes the Hobbit House in Shire Village , 1/5 of last year's total revenues ,1.4 times the company cash flow . GM Motors produced too many cars that people would not purchased . Their production and innovation line were not appealing to the market as compared to other companies like Toyota and Honda . Thus , there was very little earnings for the company and at the same time they failed to keep the employee salaries cost down.
Recommendations for Decision Maling Methods
We recommend General Motor to adopt Rational Decision Making .Â Frederick Henderson shouldn't have made decision on his own . He should have seek help from other managers and take their opinions into consideration. The company should have work hand in hand together with all the staffs to encounter this crisis . With the help of more staffs lead to more logical and consistent decisions, thus, maximizing the outcome of the direction of GM . Chief Executive Frederick "Fritz" Henderson should have been a more rational decision maker seeking a fully objective base and logical decision with the help of his subordinates .Â
Anaylse and state general motors strategy
General motors is adopting cost leadership strategy. In year 2008 General motors faces an issue of decreasing in car sales as general motors remains committed refurbishing and introducing new models in 2007 that are not fuel efficient that doesn't increase the car sales and general motors had lost respect in consumer eyes. Which they had to sell off their auto mobile in a lower price cost after the sharp oil rise price in 2008 with the Japanese competitors products in their less consumption fuel which attracts consumers on fuel efficient vehicles. From the technology of prius launch by Toyota, An innovative gas electric hybrid car. General motors having hard time catching up with the technology and starting up innovating with new technologies. In year 2008, a percentage being count that US auto mobile industry lost 8% in car sales but in asia auto industry gain 5% and European auto mobile industry gain 3%.
Recommendation competitive strategy
Firstly, As foreign automobile are innovating new technology. General motors manager could keep up the pace or creating a better or equal standard technology. But with the rising oil prices, general motors might wanted to manufacture a fuel efficient consumption engine. Secondly, General motors having a numerous car branding like Pontiac, buicle, Saturn, saab, Gmc and hammer. They could have cut down a few brands and keeping the top brand like Cadillac and Chevrolet which general motors could saving up $8 billion dollars a year and maintaining the two brands as the pillar of GM. Without sustaining that many brands, GM won't be able to maintain 6000 over dealership. If general motors follow to these strategy, they wouldn't lose that much of money every month and last resort of borrowing money from the government. Or if they close down a few brands and able to invest on technology in fuel efficient. They could able to grab back some of their existing customers back.
Analyse and state general motors's planning strategy
General motors uses strategic business units (SBUs) where they are aware of existing business environment. In the competition market of automobiles, companies are more likely to venture to the probability of their new competitors. GM biggest concern is to retain their existing the current and welcoming more new customers. From this time, the company are able to retain its market share with more commitment on consumer satisfaction.
Recommendations for planning strategy
To increase the consumer's trusts in the company's products and able to be on par with the current obstacles. General motors could benefits their consumer by financing their products and they are able to pay off in installments. on the another side, customers who are aboard are able to arrange for shipments for their car and to the local customer will benefit a certain percentage of discount.
General motors is the big organisation automobiles in north american which had more than millions of employee and more upcoming new employee will be hired. therefore by them adopting standing plan, they will be able to familiarise themselves with the on going and provide guidance for activities performed repeatedly where they can solve any similar disputes in the future.
Long term plans
This plan should be implemented for a long period of time to allow its employees to their sincerity in wanting the best interests for both parties in the company to benefits each other.
In the management level, first line managers could set a general guidelines and plan the employee in a flexible environment and monthly rosters where they are able to have a work balance between work and personal life then a stressful working environment where they have to fully commit in their work.
General Motors Hierarchy
Ways to Foster Innovation in Your Company
1. Managing: Unleashing Employee Creativity
Some employees are more naturally creative than others. But managers can play a key role in creating an environment which employees willÂ wantÂ to look for new ideas.
It's important for managers to let employees know that initiative and innovation are valued and that people who question will be rewarded-not labeled as troublemakers.
2. Provide lots of free time to think
Make it clear that company welcome new ideas and constructive criticism. Let them know the only way the organization will stay competitive is to question methods, change and by moving forward. Tell employees to always ask themselves, example like "How could we do it better?"Â
3. Use new software to round up staff ideas
What happens when your employees are too shy to voice out their ideas?Â Consider using an online survey tool to allow employees to review their peers idea submissions. And set a prize. Give your employees a forum that encourages everyone to share their ideas.Â
4. Encourage Risk- Taking
If company want their employees to be motivated to do their best, and if company want them to be the most valuable asset on your balance sheet, then let them feel and experience ownership in the organization. Effective managers make every employee feel like a business partner. Because when people feel ownership of something. They look out for it.
5. Hold an intern ContestÂ
6.Â Reward Million-Dollar ideas
Employees that are creative and that have good ideas have two choices. They can give their ideas to your business to help you make money, or increasingly, they can set out on their own. Even given the Global Financial Crisis, access to capital is easier than ever and many ideas can be set up in parallel to existing work. The only way an employee is going to give you a million dollar idea is if you reward them.
7.Â Â New project, New team
Company should allow team members to work any way they like. Company should allow employee to embrace their creativeness. So they'll be able to help clients be creative.
8. Allocate 10percent of time for invention
by allocating ten percent of employee's workweek for new ideas is the key toÂ encourage innovation