A case study for General Motors Corporation (GM)
Investigate and Analyze the Company�s History and Growth. A company�s past can greatly affect the
present and future state of the organization. To begin your case study analysis, investigate the
company�s founding, critical incidents, structure, and growth.
Identify Strengths and Weaknesses Within the Company. Using the information you gathered in step one,
continue your case study analysis by examining and making a list of the value creation functions of the
company. For example, the company may be weak in product development, but strong in marketing.
Gather Information on the External Environment. The third step in a case study analysis involves
identifying opportunities and threats within the company�s external environment. Special items to note
include competition within the industry, bargaining powers, and the threat of substitute products.
Analyze Your Findings. Using the information in steps two and three, you will need to create an
evaluation for this portion of your case study analysis. Compare the strengths and weaknesses within the
company to the external threats and opportunities. Determine if the company is in a strong competitive
position and decide if it can continue at its current pace successfully.
Identify Corporate Level Strategy. To identify a company�s corporate level strategy for your case study
analysis, you will need to identify and evaluate the company�s mission, goals, and corporate strategy.
Analyze the company�s line of business and its subsidiaries and acquisitions. You will also want to
debate the pros and cons of the company strategy.
Identify Business Level Strategy. Thus far, your case study analysis has identified the company�s
corporate level strategy. To perform a complete analysis, you will need to identify the company�s
business level strategy. (Note: if it is a single business, the corporate strategy and the business level
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strategy will be the same.) For this part of the case study analysis, you should identify and analyze each
company�s competitive strategy, marketing strategy, costs, and general focus.
Analyze Implementations. This portion of the case study analysis requires that you identify and analyze
the structure and control systems that the company is using to implement its business strategies.
Evaluate organizational change, levels of hierarchy, employee rewards, conflicts, and other issues that
are important to the company you are analyzing.
Make Recommendations. The final part of your case study analysis should include your
recommendations for the company. Every recommendation you make should be based on and supported
by the context of your case study analysis.
Company history and background
General Motors was founded on September 16, 1908 in Flint, Michigan. It was founded
as a holding company for Buick which by that was controlled by William C. Durant. It was co-
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founded by Charles Stewart Mott who by the time of GM’s inception owned a carriage company.
Late 1908, GM acquired Oldsmobile. (General Motors Company (GM) – Clean Technology –
Deals and Alliances profile, 2014). In 1909, Durant bought Cadillac, Elmore, Oakland and
several other companies. In the same year, GM acquired the Reliance Motor Truck Company of
Owosso, Michigan and the Rapid Motor Vehicle Company of Pontiac, Michigan. In 1910,
Durant lost control in GM. This was due to a bankers’ trust that was caused by the large amount
of debt taken on its acquisitions coupled with a collapse in new vehicle sales. Durant started
Chevrolet Motor Car Company through which he controlled major interest in GM. General
Motors was re-organized into General Motors Corporation in 1916. In the early 1980s, GM
experienced an unprecedented growth during which it employed 349000 workers and operated
150 assembly plants, under the leadership of Alfred P. Sloan (Houghton, 2013).
Over the years, GM has grown to be a big automobile manufacturing company which,
together with its partners, has been able to design, build and market cars, trucks and spare parts
around the world. The brands include Chevrolet, Cadillac, Buick, GMC, Holden, Hummer,
Pontiac, Opel, Fleet and Commercial, Vauxhall and Saturn. Moreover, GM provides automobile
financing services through its subsidiary, General Motors Financing Company (Essays, UK,
2013). The company sells cars and trucks to daily rental car companies, commercial fleet
customers, leasing companies and the government. This is either done directly or through a
network of dealers that have been established over the years. GM has operations in North
America, South America, Central America, Europe, Africa, Asia and Australia (Oceania). It has
its headquarters in Detroit, USA (Houghton, 2013).
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Though GM has grown over the years to enjoy dominance of the auto industry, it has internal
factors that have influenced its performance, growth and expansion. It has enjoyed strengths
from within and in equal measures has had its share of weaknesses. The strengths include:
i. Customer Satisfaction that has been brought about by perfect branding
General Motors has in the past produced quality products. This is indicated by its
scores in 2010 American Customer Satisfaction Index. GM’s Buick and Cadillac brands
took the second and third spots in overall customer satisfaction. The GMC brand also
appeared in the top 10, sitting in slot number 8 above Toyota and Nissan hence
demonstrating a 2.4% increase over the previous year (Klikauker, 2012).
ii. Huge market share depicted by its worldwide presence:
GM has an international presence with factories in Poland, Russia, South Africa,
Ecuador, Egypt, Argentina, Australia, Germany, Belgium, China, Colombia, South Korea,
Spain, Sweden and Thailand. Moreover, it has assembly, manufacturing, distribution, office
and warehousing operations in 55 other countries. Though GM lost the top slot for global
auto sales after 77 years in 2009(Reuters, 2010), it still has the top market share for any
American car Company, as reported by “The Wall Street Journal,” leading in both overall
sales as well as light truck sales (Klikauker, 2012).
iii. Lower labor costs that have been put in place since 2009
GM has kept labor cost low in most of the world, including foreign markets. In
2009, it cut its white collar labor force by 14%, according to Huffington Post. This
effectively reduced overhead for the company and ensured increase in profitability without
an actual increase sales or productivity (Klikauker, 2012).
iv. Leaner Operations
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When GM came out of bankruptcy in 2009, it had adopted a much leaner operation
system. It had cut brands, plants and employees so as to streamline production costs,
according to “The Washington Post” with the executive committee being reduced to eight
members. This enhanced the company’s efficiency and increased the speed of decision
making (Business: Rising from the ashes in Detroit; General Motors’ IPO, 2010).
The following weaknesses have however hindered its operations.
i. Diminishing Dealer Network: GM has identified more than 1000 dealership markets
that are due for closure. It also announced that it would not be renewing its franchise
agreements with almost one quarter of its dealership in the U.S. As at December 31
2008, GM had 715 dealerships in Canada and as at May 2009 plans had been put in
place for closure of 200 dealerships (Goussak, Webber & Ser, 2012).
ii. Insufficient Liquidity that has negatively affected both Research and Development and
relationship with suppliers (Goussak, Webber & Ser, 2012).
iii. Inadequate performance among some Business Segments: In 2008, the GME
segment accounted for 21.8% of the total revenues and its revenues decreased by 8.8%
to $32,440 million. Other business segments experiencing declines include GMNA
which fell by 23.9% to $82,938 million, and GMAP which stood at $12,477 million for
the 2008 fiscal year indicating a major decline (Klikauker, 2012).
Threats
Intense Competition: GM is vulnerable to fierce competition from firms like AB Volvo,
Bayerische Motoren Werke, Daimler, Fiat Group Automobiles, Ford Motor, Honda, Hyundai
Motor, Mazda, Nissan, Peugeot Citroen, Renault, Toyota and Volkswagen. Many of these have
responded to the financial crisis by adding vehicle enhancements, providing subsidized financing
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or leasing programs in order to sell more vehicles. They also offer option package discounts,
marketing incentives and reducing vehicle prices in certain markets. These actions may have
negative effects on GM’s pricing, market share and operating results, particularly on the low end
of the market (Research and markets adds report: ‘General Motors Corp. – SWOT framework
analysis’, 2010).
Global Recession: Dire predictions for the global economy were realized in 2009(Klikauker,
2012). These resulted in stalled economic growth that stretched into 2010. The decline in the
economy came with reduced consumer demand for less fuel efficient vehicles, including full size
pick-up trucks and Sport Utility Vehicles (SUVs) which had been GM’s most profitable
products. The decline also resulted in tighter credit markets making it quite hard for customers to
finance automobile purchases. The meltdown also resulted in the government of US buying out
GM (Klikauker, 2012)
Opportunities
Growth Potential in India and China: There are positive projections for General Motors
ventures in China and India. In China, the market for new cars has grown by 14% and was
projected to reach $97billion by the end of 2008. (Webb, 2005). Moreover, in India, the market
grew by 15.5% in 2008 to a dollar value of $28billion. This is a strong indicator that India will
play a bigger role in the projected increase. (Webb, 2005)
Increased Global Truck Market: It is projected that in the coming years there will be steady
growth rates. The market volume is also expected to increase. (Asia News Monitor, 2014)
Rising Demand for Hybrid Vehicles: With its hybrid models of Saturn Vue and Aura Hybrids,
Chevrolet Malibu and Tahoe Hybrid as well as Cadillac Escalade, the company will move fast to
meet this demand. Vehicles market would boost the demand for GM’s products.
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Though GM has gone through recession, notwithstanding the economic scars that tainted its
reputation, it needs to understand that there is increase in global competitive pressure and realize
the significance of it understanding the organizational behavior and dynamic changes to its
cultural and ethical environment. GM may not remain competitive if some aspects of its
operations are not improved (Groussak, Webber and Ser, 2012)
Corporate Level Strategy
GM has a powerful vision backed by a powerful strategy. It is focused on a single global
vision: To design, build and sell the world’s best vehicles. This would in effect power the
development of world-class products that are winning in the market place, and is helping to
transform business and fortify the balance sheet. This model also creates a self-sustaining cycle
of reinvestment that drives continuous improvement in vehicle design, manufacturing discipline,
brand, competitive pricing and margins (Groussak, Webber and Ser, 2012)
GM has annuals sales of over 9million vehicles and operations in more than 120
countries. Its business is diversified across products and geographic markets. The company
meets local sales and service needs for its retail and fleet customers with a global network of
independent dealers. Across the world, GM is a top manufacturer led by diverse portfolio of
brands that share core platform efficiencies and are connected by its global reach (Groussak,
Webber and Ser, 2012)
GM has equity ownership stakes directly or directly in entities through various regional
subsidiaries like GM Korea, Shanghai General Motors Co Ltd, SAIC-GM-Wuling Automobile
Company, FAW-GM Light Duty Commercial and SAIC GM Investment Limited (HKJV) (Asia
News Monitor, 2014).
Business Level Strategy
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Brand Restructuring: GM focuses to restructure Chevrolet, Cadillac and Buick. It also plans to
either close or sell out brands like Saab, Saturn and Hummer. These actions are based on sales
statistics that are lagging in the domestic market (Asia News Monitor, 2014)
Fuel-Efficiency: This has been the demand brought about by effects of global warming and
green technology for industries to become more sustainable and environmentally friendly.
Cost cutting: This will be achieved through the reduction of GM brands and models and closure
of some dealerships across the world. Cost will also be reduced through salary cuts for
employees and executives. (Asia News Monitor, 2014)
Emerging markets: Markets in India and China present GM with the opportunity to expand its
brands and become a force to reckon with in these markets. (Asia News Monitor, 2014)
Marketing Strategy: GM needs to re-establish itself as America’s leading brand.
Advertisements and commercials must not only promote this position but also emphasize the
developments in sustainability and fuel efficiency. (Asia News Monitor, 2014)
Recommendations
General Motors needs to expand its marketing strategy to cover markets in China, India,
Europe and the larger American continent. The message of its fuel efficiency cars and better
quality should be heard across all its ancient markets.
General Motors also needs to invest more of its resources in Research and Development Centers
in African and India. This will help in establishing the need for cars in those regions and also aid
in coming up with better designs for such regions and low end customers.
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References
Business: Rising from the ashes in Detroit; General Motors’ IPO. (2010, Aug 21). The
Economist, 396, 49-50.
Essays, UK. (November 2013). A SWOT Analysis of the General Motors Company Marketing
Essay
General Motors Company (GM) – Clean Technology – Deals and Alliances profile. (2014).
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London: Global Data Ltd.
Goussak, G. W., Webber, J. K., & Ser, E. M. (2012). A CRITICAL NEEDS PLAN FOR
GENERAL MOTORS: A CULTURAL PLURALISM APPROACH. Review of Business
& Finance Studies, 3(2), 45-53.
Houghton, J. D. (2013). What is good for General Motors: The contributions and influence of
Alfred P. Sloan, Jr. Journal of Management History, 19(3), 328-344.
Klikauer, T. (2012). A General Motors works council’s response to the capitalist global financial
crisis: A case study from Germany. Capital & Class, 36(2), 303-322.
Research and markets adds report: ‘General Motors Corp. – SWOT framework analysis’. (2010).
Manufacturing Close – Up
Webb, A. (2005). General Motors plans more choices for china. Automotive News, 79(6144), 21.
World: General Motors chief reveals business strategy. (2014, Jan 23). Asia News Monitor
Fixing what’s wrong with General Motors and other U.S. manufacturers; American
business concepts issues opinion editorial. (2005, Jun 06). Business Wire
