General Motors 2005

8/6/2019 General Motors 2005

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GENERAL MOTORS

By Group B4


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Issues Posed

1908

Fords

Revolutionary production method Mass production

Industry l

ead

er

Larger market

1920

Competing against one another

No economies of scale

Re-organizing to increase operational efficiency and cardesign


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Issues Posed

1970

Oil crisis

Low-cost Japanese competition

Need for smaller fuel-efficient vehicles

Lean production techniques

1984

Slump in sales of Buick division

1986

Slump in sales ofOldsmobile division


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Issues Posed

1992

Could not match low costs of Japanese

manufacturers Japanese manufacturers compete in luxury

segment

Industry average development time for carsgone down Toyota can develop a new car in

18months


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Problems facing the company

1908

High manufacturing costs

Expensive cars catering only to the wealthy Multiple car brands No common identity

1920

Managing and controlling 25 companies


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1960s & 1970s

Strict union rules prevented them from laying offemployees or closing facilities, health care and pensionliabilities to employees - $45 billion

Greater benefits for pension and medical than whatToyota and Honda gave

Lesser premium charged for cars- profit margins arelow so vehicles sold at a loss

Toyotas Return on sales, net earnings , ROIC higherthan GM

Over capacity led to discounting war with Ford, Honda& Volkswagen to gain market share


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1970

Flaw rates higher compared to Japanesevehicles

Customer awareness of poor quality and high

cost1980

Lack of know-how to operate automatedfactories successfully

Expensive automated factories Frequent downtime due to break down of robots

Reduction in competitive advantage lumberingbureaucracy


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1983

Failed joint venture due to poor quality and badlabor management NUMMI

1987

Failure of reorganization

Key decisions by central engineering and

manufacturing staffs instead of individualdecisions

Not reporting to heads


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1991

Saturn project Sold lower than capacity, $800

million loss

1989

Market share declined from 44% to 33%

2002 GM discontinued Chevrolet Camaro & Pontiac Firebird

as they lost this market niche to competitors


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2000s

Japanese automakers introduced new &improved SUVs and trucks-threat to GM and Ford

price wars Introduce hybrid and fuel efficient cars to

maintain market share & profitability

GM placed its bet on hydrogen fuel- cell

technology impractical Car makers in a continuous battle to develop right

vehicles to meet changing customer needsglobally


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2005

GM paid $2billion to withdraw from the20% stake ithad in Fiat

Expensive acquisition ofSaab - GM lost hundreds ofmillions of dollars

GMs Opel, Vauxhall struggled to compete with Ford,Japanese companies & Renault

GM has to meet the challenge of its global competitors

Finding the right way to brand and market its cars- asglobal competition increased

GMs Oldsmobile is gone


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Recommendations

Build better relations with suppliers especially

Tier One parts Suppliers Avoid heavy bargaining

Extend the supply chain Forward and backward

integration

Standardize components across models and

reduce number of parts needed to produce a car


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Recommendations

Update themselves with latest technology,

design and car parts

Develop strategies to meet changing customerneeds and gain a competitive advantage over

global players

Find the right method to brand and market

their cars

Documents

General Motors 2005