A Look at General 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