The nature of GMs global strategy

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General Motors Corporation is one of the world's largest automotive companies. It focuses on the design, development, manufacturing and marketing in the car industry. This American company which was organized in1908 produces vehicles in 34 countries but primarily operates in North America and Europe. GM headquarters is in Detroit, Michigan with 243,000 employees. It operates not only in automotive industry but also in different industries including financial services which are referred to as GMAC. This provides mortgage lending, car insurance as well as consumer vehicle financing. The automotive industry, however, is referred to as GMA, includes 4 segments which are formed from GM North America (GMNA), GM Europe (GME), GM Latin America/Africa/Mid-East (GMLAAM) and GM Asia Pacific (GMAP). (General Motors Company Profile, 2009).

As it was mention before, General motors operates in a global extent due to its excessive demand across America, Europe and Asia. It sells its vehicles under different brands including Chevrolet, Buick, Saab, Hummer, GMC, Saturn, Cadillac and Pontiac in North America. However, other different vehicles are produced through other different brands outside North America such as Vauxhall, Opel, Daewoo, Isuzu, Suzuki as well as some of the ones cited in North America. (ibid)

The purpose of this report is to analyse General Motors' global strategy including innovation, marketing, operations, human resource management and finance as well as some of the key issues and problems in the organisation.

The nature of GM's global strategy

General motors has been operating in a global market for over twenty years. It started to penetrate the global market in 1980s under the control of John smith, former General Motors chief executive officer. In that time, he led the company to a big success in North America as well as in Europe. He then led to a sharp increase in the Chinese and other markets. Johnson, R (2008). Lou Hughes, former General Motors International Operations president, who was succeeded by John smith also contributed to the company's global strategy.

General motors' roots of success took place when the iron curtain came down and after the recovery of the world economic climate in the 1990s. In that time, the international managers moved towards an international strategy rather than referring to its headquarters in Detroit (ibid). Johnson, R (2008) pointed out that in 1987: "John smith had done in Europe what he would do five years later in the United States". In other words, john smith led to a great efficiency in the company in Europe by costs reduction, increased the productivity and improved the product line. Cost cutting leads to an increase in the income of the company which will then lead to a higher market value. The rest of this essay will explore General Motors' innovation, marketing, operations, human resource management and finance .

Innovation

In the words of Needle, D (2004) "Innovation is the process through which inventions and new ideas become a business or operational reality. An innovation can include new products, processes, strategies and organization structures. Innovation is claimed by many as an important source of competitive advantage." Innovation is one of the business strategies that General Motors sacrificed for many years ago but failed to accomplish it. "G.M. has spent billions of dollars on innovative ideas like its Saturn small-car company in the 1980s and the EV1 electric vehicle in the 1990s, only to then deprive those projects of further financing because money was needed elsewhere or because they were not delivering enough profit." Stated Micheline, M (2008). There was a big failure on these projects led by its legendary leaders like Alfred P. Sloan Jr. and Charles E. Wilson, who believed that the new company project in innovation would make an extreme success.

Innovation was in GM's genes since 1960s, argued an industry analyst. Hybrid technology was the main area where the company was focusing on in terms of innovation. GM is doing well in this technology but Micheline,M (2008) argued that it would be the leader of hybrid technology if it had encouraged its engineers in the 1970s. One of GM's directors was trying to illustrate the reason for not being an earlier innovative in the car industry. The main reason was actually the slow response due to an excessive demand for smaller, more fuel efficient cars (ibid). In other words, the company did not have a suitable product in order to compete with Toyota Yaris as well as Honda fit.

Marketing

As mentioned before, General Motors operates under different brands. Therefore it has different marketing strategies as well as infinite advertisements campaigns. In the words of Needle, D (2004) "Marketing is an interactive process aimed at satisfying or even exceeding customer needs. It is concerned with the design, pricing, promotion and accessibility to the customer of goods, services and ideas. It exists in all types of organization and is the responsibility of all members of the organization."

General Motors launched a new marketing strategy in order to lure its customers specifically in South Africa. The advertisement campaign was about Chevrolet with a feeling of the old fashion in the seventies which shows young South African enjoying themselves and falling in love with the Chevrolet. The conclusion drawn from this commercial advert is that even in hard economic situation, the marketers still doing their job. Koenderman, T (2009)

Operations:

A definition of operation could be given as the following according to Needle, D (2004) "Operations is concerned with the transformation of a variety of inputs such as information, people, materials, finance and methods into a variety of outputs such as goods, services, profit, customer and employee satisfaction. Traditionally associated with manufacturing production, it is now generally recognized that operations is a key function in all organizations, irrespective of their primary objective. The centrality of the function means that operations have a significant influence on costs and revenue as well as organization structure."

According to GM insiders, GM's bankruptcy is highly likely an outcome but the slase of its brands and operations is still going on. However the company is actually running out of time because of its government June deadline. So the company has to decide whether to sell its assets or to cut operations across Europe.

Human Ressource Management

In 1998, Wagoner has been placed as a president and chief operating officer of GM, he deduced that the General Motors should change the method in manufacturing and selling cars or the company remain failing and losing its rank and importance in the world's pre-eminent carmaker. However, the crucial problem to solve out is; to refurbish the HR department as Wagoner said "In my mind, HR is paramount to our reorganization effort. If we are to hire, train and keep the best workforce possible, then we must have the best and most up-to-date HR practices possible," and added; "In my mind, HR is paramount to our reorganization effort. If we are to hire, train and keep the best workforce possible, then we must have the best and most up-to-date HR practices possible,"

Mr Wagoner has begun by arranging the organization inside and out. He started by newly training the employees to arrange the senior executive management committee for instance; the chief financial officer and the vice president of communication whose are the more experienced in the company. In addition, Wagoner named this strategy, "The automotive Strategies Board".

Wagoner has placed Kathleen Barclay, the new vice president of HR for General Motors. He made this decision because of her efficiency in work, for example; she created a new strategy called the 3Ts: transformation, talent and technology. Even that, David Ulrich, a management professor at the University of Michigan in Ann Arbo said: "Rick Wagoner is doing a wonderful job at GM, and he is taking the correct approach in involving and placing HR into a leadership role in the reorganization process", GM did not turn out from its terrible track by increasing it sells and income but it finished in a bankrupt in 2008. Bill, L. (2002).

Finance

The US government has invested in General Motors $3.8 Billion to help GMAC for not going bankruptcy and having in benefit a stake in the company which could control it.

GMAC has been facing loads of problem and factors the last decade and especially in the last three years. This action made the treasury to give possibility for GMAC to survive and reform a new structure for its future and to restore in the private markets, and gain its place again.

This investment made by the treasury is to push the employees of GMAC to pay the usual taxes and the treasury's equity stake will move to 56 from the 36% in GMAC. In addition, it will allow the government to put two directors and having a annual meeting in April to lead GMAC in a better track of success . What is more, GMAC was the long term financial arm of the biggest US carmaker in 2006, when GM sold a large proportion of its stakes. Therefore, the government invested on it recently in order to avoid and survive at the world financial crisis at first. (AFP, 2010)

Key problems and issues

General Motors has been considered as a biggest car company in the twentieth century, it has been operating globally since 1931 up to 2008 when it became the world second largest multinational company after its Japanese competitor, Toyota. Fabrizio C (2009). The company recorded revenues of $148,979 million during the financial year ended December 2008, a dramatic fall of 17.2% in 2007 (General Motors Company Profile, 2009). The sharp fall in revenues was due to the decline of automotive sales of $29.9 billion (ibid). General Motors' auditors argued that there is no doubt that the company is going bankruptcy very soon even if it receives a loan from the federal government. Bunkley, N (2009). However, General Motors would have to sell its assets if the loan from the government was rejected, suggested the auditing firm, Deloitte & Touche (ibid).

"Our recurring losses from operations, stockholders' deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern," G.M. said in its filing cited in Bunkley, N (2009). However, the announcement does not mean that the company is in case of bankruptcy.

In General Motors' bankruptcy petition, it was revealed that the company had $82.3 billion in assets and $172.8 billion in debt. Wilmington Trust Company was its largest creditor which represents a group of bondholders holding $22.8 billion in debts. Fabrizio C (2009).

GM had a negative operating cash flow in the financial year 2007 compared to the positive one in 2008 of -$12.1 billion and $7.7 billion respectively. These considerable losses were caused by losses in GMNA due to significant working capital deterioration as a result of lower sales volumes. (General Motors company profile, 2009)

Another recent key issue in the organisation is that the company has gone through a dramatic fall in sales in different segments such as GMNA, GME, GMAP and FIO. The GMNA, for instance, the volume of sales has declined by 23.9% in the financial year 2008 to reach $82,938 million. This sharp fall in sales was due to a fall in volumes and unfavourable mix of $23.1 billion resulting from continuing market challenges. (ibid)

In spite of the difficult times that General Motors went through, it remains the biggest large car company after the Japanese Toyota. The company has many opportunities such as a growth potential in China and Indian, another key opportunity is the increase demand of hybrid electronic vehicles as being a leader in innovation.

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