Gm Motors

A Look at General Motors

www.gm.com

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Introduction to General Motors:

General Motors was founded in 1908 and with the purchase of Buick Motor Company GM grew rapidly. GM continued to purchase Cadillac, Rapid Motor Vehicle, which eventually became the GMC Truck, as well as Oakland Motors now known as Pontiac, and in 1918 Chevrolet was also purchased. In 1919 GM created their General Motors Acceptance Corporation, which allowed the company to provide a way to finance purchases of their vehicles for customers. GM is known for not making money off of their vehicle sales but more from their financing structure they have created. General Motors has been participating in global sales, exporting since 1911 and 1920 the first office overseas was created for sales reasons located in Asia. The first GM manufacturing plant was in the capital of Denmark, Copenhagen in 1923 and then Buenos Aires in 1924, the capital of Argentina. General Motors CEO of 1924, Alfred Sloan stated, "A car for every purse and purpose," which was the original strategy of the company. The company was known for it's innovation in service and technology, starting with the electric starter in 1911 and in 1926 Cadillac was the first to have a straight forward nationwide service policy, which allowed customers to have a reassurance with the purchase of their vehicle. Also the vehicles made by GM have been around for quite sometime, known for the having all different vehicles providing a different style, whether looking for comfort, practical, or even for looks. Overall the company grew over years reaching 100 million by 1967, having 47% of the U.S. automobile market. However, today, GM has encountered a problem of only having claim of 26% of the U.S. automobile market, which has caused a huge decrease and problems to the present organization and its leaders.

Mission Statement:

"General Motors is committed to be a leader in providing transportation products and services of such quality that our customers will receive superior value, our employees and business partners will share our success and our shareholders will receive a sustained superior return on their investment."

Vision Statement:

"GM's vision is to be the world leader in transportation products and related services. We will earn our customer's enthusiasm through continuous improvement driven by the integrity, teamwork and innovation of GM people. Becoming the best is an unending journey, a constantly changing destination. But that's where we're determined to drive-one car, one truck, one customer at a time."

Internal Analysis:

In the chart below is a look at strengths and weaknesses of General Motors Internal Environment. Starting with the finance aspect of GM, the company is way to dependent

on U.S. sales as well as their policy of making money from financing of their vehicles instead of the actual sales of vehicles. U.S. sales contribute to 2/3 of sales for GM, which means that GM has no actual market that is a lot bigger in sales than another; sales seem to be in little sectors, spread out. Then the dependence of financing providing profit instead of actual sales is risky because if there are customers that can pay for a car right up front there is not profit made because the price of the car is lowered to a point that will only be put back into costs for the business and will not add revenue. However, in 2004 the financing aspect had 16% of sales and provided about 100% of GM's profits. This shows a positive part to the financing profit strategy of the firm, allowing consumers to be happy with the lower prices of vehicles since GM can lower the price of a vehicle to it's cost price, but very risky if consumers don't choose to finance with GM. Another factor is that in previous years GM had control of 47% of the U.S. automobile market, and today it is down to a low of 26%. This brings the next problem, which research and development is lacking because GM has no production of a fuel-efficient vehicle, such as the hybrid. GM competitors such as Toyota are taking the lead because they have developed their technology in the production of a fuel-efficient vehicle. Another issue that arises is that most of GM vehicles are gas guzzlers and SUV's, which made GM known for producing stylish, roomy, and safety vehicles, but now has caused issues for profits since fuel efficient vehicles are in higher demand with the steady increase in fuel prices. Management for GM is growing in size but not in sales, which is of course not reasonable. If profits are not increasing there will become a point where to many are employed and not enough money coming in for the company to maintain such a large staff. GM assets grew from $370.782 billion in 2002 to $479.603 billion in 2004, but revenues in 2002 were $186.763 billion then grew to $193.517 billion. This shows that profits are not doing so well for the company, even though there is an increase from these two years, its not a sufficient increase, net income went from $1,736 billion in 2002 to $2.805 billion in 2004. Another issue I considered to be apart of management was the UAW, which GM employees are signed by contract to, which has the benefits for employees, but because of health insurance price increases, problems for GM have occurred because it is affecting profit of the company. Leaders of GM are in the process of figuring out a way to re-establish the policies in order to prevent loss in profit. This is seen as a problem within management because if employees are not pleased GM could run into a loss of employees to competitors, such as Toyota who is advancing with the Fuel-efficient vehicles and able to afford the costs. Management of GM needs to figure a way to keep profits on the rise but also maintain satisfaction for employees. The providing of a service has been more of GM's strength, such as the On-Star Satellite technology that will be available on all makes and models of GM products. This product allows vehicles to be tracked incase emergency and theft situations, as well as communication between passengers and an On-Star employee, trained to handle such situations that may occur when traveling. On-Star technology is very popular, reaching 3 million current subscribers. Other products that have made an impact on sales is the mini-cars such as the Chevy Aveo, starting at $9,995 and gets about 30 miles to the gallon, increasing sales by 66% from 2003-2004. This is a plus, but at the same