General Motors Group Presentation Nate Shewell Alan Pierce Rebecca Adamson Stuart Niebuhr Cassie Pea

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General Motors Group Presentation Nate Shewell
Alan PierceRebecca AdamsonStuart
NiebuhrCassie Pearson
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GM Corporate Overview

• The worlds largest automotive manufacturing firm
  (by sales volume)
• Buick, Cadillac, Chevrolet, GMC, Holden, HUMMER,
  Opel, Pontiac, Saab, Saturn, and Vauxhall
• Auto parts manufacturing, General Motors
  Acceptance Corp (GMAC), OnStar

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GM Financial Condition

• Estimated 4.8 Billion loss to date (2005)
• Dropping Profit Margins
• Slowing Sales
• Junk Bond Rating (non investment quality)
• Plummeting Stock
• Bankruptcy? Restructuring?

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Problems at GM

• Bad Management
• Downsizing is a sign of managements failure
• Squandered the opportunity to turn around the
  sinking car lines

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Problems at GM

• Health Care costs
• Health care costs are strangling GM
• 1,500 of each GM vehicle manufactured in the
  United States last year was spent on health care.
  
• Union Issues
• Appears as if the United Auto Workers union would
  rather sink the company than make
• the necessary sacrifices.
• Risk of strike at Delphi

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Additional Trouble for GM

• Inconsistency of business level strategy and
  actual practices
• Fuel prices
• Issues with suppliers

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Dissonance Between Business Level Strategy and
Actual Practices

• GM has adopted a business level strategy based on
  product differentiation.
• A successful auto firm must emphasize the art of
  designing and producing vehicles that people
  really want or needvehicles that consumers
  gotta have and that they are willing to pay a
  good price to get.
• Unfortunately, none of GMs new vehicles are
  blockbusters (the design and look of GM vehicles
  has not been exciting).
• Consumers arent receiving the promised
• product excellence and so fewer consumers
• are purchasing GM automobiles.

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None of GM's newer vehicles have been
blockbusters (by the looks of these, I think
you can see why!)
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Decreases in Demand Due to Increases in Fuel
Prices
Gasoline Prices Historical and Today

• Energy efficient cars have become increasingly
  popular with U.S. consumers due to the sharp rise
  in oil prices.
• Toyota sales up 12
• Toyota Prius sales up 260 from last year
• Nissan sales up 12
• Honda sales up 7
• Honda Civic Hybrid sales up 25
• In sharp contrast, GM reported a sales drop of
  24 compared with the same month a year ago
  (September).
• Sales of trucks, minivans and SUVs dropped 30

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Supplier Relations

• GM is facing potential cost increases due to
  relations with bankrupt supplier Delphi
  Automotive Systems Corp.
• Delphi bankruptcy has resulted in union labor
  disputes, inciting talks of labor strikes by
  Delphi union workers.
• Strikes will halt Delphi parts production,
  ultimately causing GM production to stop (Delphi
  is GMs largest parts supplier).
• In order to keep Delphi production going, GM
  recently agreed to forgo previously agreed upon
  lower parts prices scheduled to take effect in
  2006.
• Vertical integration woes
• In the 1999 Delphi spin-off deal, GM agreed to
• honor some Delphi employees retirement costs if
• Delphi could not honor them. GM has said that
  Delphi
• insolvency may increase future GM retirement
  costs
• by 12 billion.

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Recommendations

• Decentralize decision making
• GM uses an M- form structure with divisions
  separated into geographic regions and other
  functions
• GM needs to integrate a Transnational structure
  to involve strategic and operational decisions to
  division managers in their geographic regions.
• Have employees pay for a percentage of health
  care costs.
• Employees currently do not have to pay
• anything for health care. GM should have
• employees pay about 200 dollars every
• month for health care.

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Recommendations

• Better Research Development
• More Fuel Efficient Cars
• Alliances

• If an exercise consists solely in demanding more
  and more
• from the supplier, without modifying your
  relationship
• with him, thats not going to last long.
• Carlos Ghosn,

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5 Forces Analysis

• Competitors
• Ford, Toyota,
• Daimler Chrysler

Substitutes Public Transportation Bicycles,
Skateboards, etc Walk
Buyers Many in number Dont want bad car models
New Entrants Low Threat High Barriers
Suppliers Delphi Gas (supply, prices) Union
(health care)