Analysis of General Motors Automaker - Case Study Example

Introduction General Motors (GM), Ford, and Chrysler are the three leading automakers in the world. GM is however the leading. Over the past years, it has stood out as the largest and most successful. General Motors is specialized in designing, producing, and distributing vehicles in at least 37 countries over six continents. This motor processing company also has the largest workforce, with an average estimation of 212,000 workers. Its acquisition of AmeriCredit Corp in October 2012 made the GM to advance its services to provide auto finance services in united stated, Canada, Europe, and Latin America. The long operation of GM Company in the auto industry has been successful because of production of high quality and long life expectancy products with low cost maintenance. The major steering wheel in GM successful operations in the business over that long period is as a result of the firm crucial decisions, that cased by economics situation, political conflict, or even new trend in the culture that required an adoption with these changes. GM had been facing these difficulties, sometimes resulted losses, in other times, seeking for a government aids. Some of the GM brands are Vauxhall, Buick, Cadillac, Chevrolet, GMC, Holden, Opel, and Wuling. Latest GM automotive brands include McLaughlin, Oakland, Oldsmobile, Pontiac, Hummer, Saab, and Saturn. Been new to the market, some of these new brands brought a drastic fall in the income of GM, forcing it to shut down parley manufacturing Pontiac, Saab and Hummer as a way out to reduce cost and avoid going to bankruptcy in 2008 Automobile industry “globally” So many changes have faced the world, ranging from technological to cultural. This has made it tough for the GM to meet the daily changing customer expectations. The level of global competition has also been high. Fortunately, the free boundaries and government restrictions on importuning and exporting and the increase of purchasing power from low and medium income class have changed the falling production rates for automotive producers, enabling them to recognize customers desired and to meet their demands effectively. Historical revolution in automotive industry The first idea of building a simple transportation design was in 1768, by Nicolas-Joseph Cugnot. His idea was to provide a car with power by an internal combustion engine fueled by hydrogen. Scientific innovations changed the idea over years, but had no impact on the automotive industry. The automotive industry has been changed by three major innovations in US. The first was the 1820-1870 Industrial. The use of waterpower that was later advanced to steam to run machines brought advancement in the automotive industry. The second element was the war world II. During the war, America allocated all its resources to military production to provide its allies with they needed. After the war, US switched their military manufactories to commodity and building material. Third revolution was the Internet and social media in 1950s. US used this new channel for advertising their automotive products. Automobile in US “domestic” Since 1900s, the largest US automakers were Ford, GM, and Chrysler. Henry Ford took opportunity of the waterpower in automobile to make cars at reasonable price for middle class income. Ford made the first automobile that was affordable to middle class Americans. William Murphy, saw Ford’s designs and hired him for his new company, Detroit Automobile Company. Ford later started building his own car empire in 1903. The ford motor company produced cars like the Model T at significantly reduced costs of at least $290 by 1924. The high sales of this model made Ford the largest automobile company in the U.S. The Model T was replaced by model A in 1927. However, Ford lost ground to GM and eventually Chrysler, as auto buyers looked to more upscale cars with newer styling. William Durant was the founder of General Motors Corporation in 1908. GM build its foundation by acquiring various several automotive related experts and small companies like Buick, Oldsmobile, Oakl and Cadillac, along with a number of other car companies and parts suppliers. Durant also was interested in Ford, but he decided to keep his company independent. Over extending of its acquisitions made Durant to lose control over GM in 1910, where a group of banks took over. Durant and Louis Chevrolet founded Chevrolet in 1913 and began acquiring stock in GM and by 1915. GM acquired Chevrolet in 1917 but GM forced Durant out of the company in 1921. Under the leadership of Alfred P. Sloan, General Motors overtook Ford to become the largest automaker, with decentralized management and annual model changes. GM expanded overseas, purchasing Englands Vauxhall Motors in 1925, Germanys Opel in 1929, and Australias Holden in 1931. Among other successful advancements of GM was the established General Motors Acceptance Company in 1919 to provide credit for buyers of its cars. The American automobile corporation has never been stable, there was always up and down in expanding production. When something unexpected was to happen, the firm did not see it coming. Up to date, General Motors Company today is in a state of complete turmoil, surviving on Federal loans and debt. In an advertisement issued by the company in December of 2008, which was published in AutoNews, the corporation admitted to its poor choices over the years: neglecting quality, creating unrealistic compensation plans, overlooking changing consumer tastes, and focusing its product lines too heavily on trucks and SUVs. What had changed for GM since its almost half-century ago all-time-high market share was its lack of innovation over the years. The problem that GM faces is, not only is the company slow to pick up on consumer trends, it often fails to adapt to these demands all together. With gas guzzlers like the Hummer and 12 MPG Cadillac Escalade in its lineup, neglecting the production of hybrids and fuel efficient cars leaves GM hard pressed to see increases in its market share (Sanger). GM’s path of poor choices has led the company to where it stands today: overhauling the entire company and praying for survival. Regards to foreign competitors in US, seems that since Honda opened its first U.S. plant in 1982, almost every major European, Japanese, and Korean automaker has produced vehicles at one or more U.S. assembly plants.  In addition to Honda and the big three U.S. auto companies - General Motors, Ford and Chrysler - Toyota, Nissan, Hyundai-Kia, BMW, Mercedes-Benz, Mazda, Mitsubishi, and Subaru all have U.S. manufacturing facilities.  In May 2011, Volkswagen opened a new U.S. plant, bringing the manufacturer count to 13.  In addition, many manufacturers also have engine and transmission plants and are conducting research and development, design, and testing in the United States.  The automotive industry, including dealerships accounts for approximately 3.5 percent of U.S. gross domestic product.  Motor vehicles and parts manufacturers directly employed 786,000 people at the end of 2012.  There is an extensive network of auto parts suppliers serving the industry.  Suppliers produced $225.2 billion in industry shipments in 2012, accounting for nearly 4 percent of total U.S. manufacturing.  According to a study by the Motor & Equipment Manufacturers Association in collaboration with Information Handling Services, the total employment impact of the auto parts industry was estimated at over 3.62 million jobs directly and indirectly nationwide in 2012 - more jobs and economic wellbeing than any other manufacturing sector. Despite challenges within the industry in recent years, the U.S. automotive sector is at the forefront of innovation.  New research and development initiatives are transforming the industry to better respond to the opportunities of the 21st century. In 2012, the United States exported approximately 2.6 million vehicles valued at $63 billion to more than 200 countries around the world, with additional exports of automotive parts valued at approximately $75 billion.  With an open investment policy, a large consumer market, a highly skilled workforce, available infrastructure, and government incentives, the United States is the premier place for the future of the auto industry.  The Auto Industry Today The US auto industry is extremely competitive with each automotive company fighting for the world’s largest market. Although US own the big 3; GM, Ford, and Chrysler, it has however been outcompeted, concentrating much on its domestic market. From 1985, the Big 3 have lost their market share from 80%, to below 43%, with its main competitors been Honda and Toyota from Japan and Europe. This is because they produce more dependable and more efficient cars. The state of economic decline in US has also caused a dramatic decrease in the GM sales over the years. The April 2008 sales show 33.1% from GM, 31.3% from Ford, Chrysler 48.1%, Toyota 41.9%, and Honda is down 25.3%. The US automotive takes a mature industry structure. Economic contraction and lack of large new markets have slowed down industry growth, with new international competitors eating away at the dominant market share held by the Big 3. Toyota and Honda have been taking advantage of this mature industry structure and have been creating new lines, such as the fuel-efficient hybrid models. The combination of low pricing and fuel efficiency began to drive US automotive buyers toward the international companies and away from the old tradition of owning and driving large SUVs. The Big 3 lagged behind the international companies when creating fuel-efficient cars and did not release one until 2004. The Big 3 are working on refining their products, however they are still lagging behind the international firms. For years the consensus has been that Japanese automakers build quality cars while the US automakers build unreliable cars that will break down quickly. Over the past few years, the Big 3 have begun to increase the dependability of their cars, which is shown by higher rankings from Consumer Reports Magazine. Work cited History of the Movement to Organize Foremen in the Automotive Industry, December, 1938 - May, 1945. Detroit, Mich: The Corporation, 1945. Print. Read More