GENERAL MOTORS

.
GENERAL MOTORS AN OVERVIEW

Year of Establishment
1908
Year of Christening as GM Corporation
1916
Name of the Founder
William
Company Headquarter Durant
Detroit, Michigan, United States
Operation In 33
countries
No. of Employees
3,27,000
 Key People of GM
CEO : Fritz
Henderson.
Chairman : Ed Whitacre
ice Chairman : Robert A. Lutz.

CFO & Executive VC :

Ray G. Young
 Present Owners
 United States Treasury 61 %
 United Auto Workers VEBA 17.5
%
 Canadian & Ontarian Governments 11.7
%
 Bondholders of Former GM 9.8
%
(now called as Motors Liquidation Company)
 AWARDS & ACHIEVEMENTS
• “Best Car Manufacturer” by Middle East in 2008.

• “Corporate Hispanic Advocate of the Year”

Award in 2006.

• “ 2005 Corporate Champion of the Year”

Award..

• Won “Green Award” for launching Solar Car.

• “Diversity Awards” Given to GM

 Journey of General Motors to Government
Motors
Journey begins :

1900 :- Motor Companies were in dire

straits during this period.

1907 :- Stock Market panic in this year put a

lot of companies in financial distress.

1908 :- The various companies folded into a

single unit, creating GENERAL MOTORS.
1908 :- Founded on September 16, in Flint, Michigan as
holding company for Buick, controlled by WILLIAM C.
DURANT. Acquired Oldsmobile later that year.

1909 :- Acquired many companies & folded into a single

unit , called General Motors Corporation.

1910 :- William Durant was removed from the

company & bankers prevented financial collapse.
1911 :- Company advanced to International Market.
General Motors Export Company was formed to handle
sales outside U.S. & Canada.

1915 :- Durant formed Chevrolet, to come back into

GM.

1915-1920 :- The period was full of success . Cadillac

became wildly successful. Durant reorganized General
Motors Company into General Motors Corporation.
1918 :- GM bought the operating assets of Chevrolet
Motors.
1920 :- Durant again found himself out of the company,
after the new vehicle market collapsed.
 Journey to Zenith :
1920 :- Thereafter Alfred Sloan took charge of the
corporation, thus, giving a fresh lease of life into GM and
led to its post war global dominance.

During the financial boom in the 1920's, the history of GM

virtually glowed with success. Auto sales reached the 4.5
million mark, and the auto industry now had three giants -
GM, Ford and Chrysler.
 1929 :- The
1929 TheGreat
GreatWall Street
Wall crash
Street put put
crash an abrupt stop tostop
an abrupt all expansion
to all plans at
GM. Stock Price
expansion plansfellatbadly.
GM. Stock Price fell badly.

1930 :- GM bounced back and bought the Yellow Coach bus company.
1930 :- GM bounced back and bought the Yellow Coach bus
company.
1930 :- It also bought Electro- Motive Corporation, the internal combustion
engine railcar builder.
1930 :- It also bought Electro- Motive Corporation, the internal
combustion engine railcar
1955 :- 31st December, builder.
1955, is another landmark in the history of GM. The first
company to make more than a billion dollars in a year.

1955 :- 31st December, 1955, is another landmark in the history of

GM. The first company to make more than a billion dollars in a year.
1931-2005 :-

• Led in Global Sales for 75 consecutive years.

• Manufactured cars and trucks in 34 countries.
• Employed 2,44,500 people around the world.
• Sold & served vehicles in some 140 countries.
STRATEGIES THAT LED TO GROWTH

Positioning itself in emerging markets so that the

company will grow simultaneously with these
economies.
 Manufacturing of small cars for Brazil as well as
other countries including Argentina and Paraguay.
 Expand the product development center.
 Taking on the responsibility of developing GM’s
small cars in support of its GM Daewoo operations
in Korea.
• Hiring & Developing the best talent.
• Expanding its product base to mid-size trucks.
• Investing in Emerging Markets.
• Providing right product to the right person.
• Huge investment in promotional activities.
• Continuing to expand global client base.
• Emphasis on “Continuous Safety: Protection Before,
During, and After a Crash.”
Adopting to a different international marketing strategy.
• Focusing on a large number of brands.
• Segmenting the market on the basis of cars:-
Chevrolet- Entry level car buyers.
Opel & Vauxhall- Middle market consumers.
Cadillac- Wealthy people.
Hummer- Premium market consumers.
• Provided Power Steering, Power Brakes,
Independent Suspension, & Automatic
Transmission.
• First Auto company to change its car features &
styling almost annually.
• Brand Differentiation that offered “A car for every
purse & purpose”.
 CORPORATE SOCIAL RESPONSIBILITY
• K-12 Education Initiatives.
• Environment.
• Community Involvement.
• Eliminating Waste.
• New Solar Installations.
• Partnership with Ethanol companies to reduce dependency
on petroleum or any other fuels.
• Manufacturing Hybrid Vehicles, mostly solar powered.
 PHILANTHROPY

• Funding for “Safe Kids Buckle Up” program to ensure

child automobile safety through education and
inspection.
• Contributing more than $1.2 billion to over 18
universities to support engineering education.
• Leading contributor to charity.
• Contributing $ 5,12,00,000 in cash & 1,72,00,000 in
kind donations to charitable causes.
 DOWNFALL
2005 :-
• GM booked a $4 billion loss.
• 30,000 employees were laid off.
• 12 plants were closed down.

2008 :- In late 2008, GM received loans from the America,

Canadian, and Ontarian governments to bridge the late-
2000s recession, record oil prices, and a severe global
automotive sales decline due to the global financial crisis
of 2008–2009.
2009 :- On April 27th GM announced to phase out the
Pontiac brand by the end of 2010. Rather it focused on
only four major brands- Chevrolet, Cadillac, Buick, and
GMC.

2009 :- On 1st June, 2009, General Motors’ applied on for

Chapter 11 protection from its creditors, triggering the
biggest industrial bankruptcy in history, was nonetheless a
momentous event.
Announced plans to reduce U.S. Workforce by 20,000
employees.

 NGMCO Inc. purchased the ongoing operations from

GM.

 Announced new Board of Directors

 Fritz Henderson, new CEO.

Reasons for downfall
 Not filing for Bankruptcy sooner.

Huge legacy expenses such as high cost of pensions and health

care .

 Over reliance on gas guzzlers , Mediocre product quality &

Unimpressive design .

 Revolution of Shareholders/ Institutional Investors for high

payout.

Driving incentives into the ground .

 Selling control of GMAC.

Timid & Poor management.

Less attention to R&D and innovation.

Reasons for downfall
 Killing the EV1 electric program.

 Ignoring Jerry York.

Mishandling Fiat .

There were no. of litigation & lawsuit against GM during

2003-08 . Such as – Green House Gas Lawsuit.

Emphasis on manufacturing big cars and SUVs .

Carrying of non-profit contributors.

GM’s top selling Chevorlet division to launch SUVs this

year ,where the rivals launch it 4 yrs back.
Impact of GM’s Bankruptcy
 GM Bankruptcy send the rallying market into reverse.

 GM will layoff thousands of employee to reduce cost.

 Slashing the number of dealership.

 Competition will be stronger for GM due to downsizing .

 Many dealers lost their confidence and have taken non-GM

franchises.
Continue…..

GM’S bankruptcy could impact Indian service providers in

a small but significant way, immediate impact being
delayed payment and ramped down existing project.
 There will be adverse impact on US steelmaker.

The GM fiasco will boost up the confidence of Asian Auto

maker to increase their market share.

GM customers may suffer severe cutbacks in service and

availability of parts
The used GM car market — already burned — will be
toast.
 Principal Competitors of GM & market share in
US.
25 23.5
22.1

20

16.5
15.9
15.2
14.7
15
12.6
2007 (%)
10.8 10.6
2008(%)
9.4
10
7
6.5

0
GM TOYOTA FORD CHRYSLER HONDA NISSAN

Note : Above data related to passenger car & trucks.

Comparison of Industry v/s GM sales
Comparison of the new and the old General Motors

Old GM   New GM

Buick, Cadillac, Chevrolet,

Daewoo
Buick, Cadillac, Chevrolet
GMC, Holden, Hummer, Brands
Daewoo, GMC, Holden
Opel,
Saab, Saturn, Vauxhall

5,900 Dealerships 3,600

Common shareholders, The and Canadian

bondholders, Ownership governments,
and secured creditors and UAW union

47 Plants 34
$176 billion Debt $48 billion
91,000 employees 68,500
Survival strategies for GM
 Revise GM’s sales projection.

 Make more fuel efficient cars that burns less gasoline.

 Trim models from 48 to 36.

 Launch new models in market which are customer friendly .

such as “Chevorlet Cruze”

 Invest in passenger cars.

 Ditch half of its brands.

 Hire special Experts.

Survival strategies for
GM
 Development of alternative fuel vehicle.

 Development of Hybrid or Eco-friendly car.

 Reduce compensation and headcount.

 Reduce the no. of Retail Channel and Dealer network.

 Sale some of businesses

 Give more responsibility to Managers.

 Reduction in meeting hours.

 Overview of Financial Aspect

Revenue : US$ 148.979

billion (2008)

Operating Income : US$ 21.284

billion (2008)

Net Income : US$ 30.9 billion

(2008)
 FINANCIAL HIGHLIGHTS
31st December 31st December

2008 2007
Total Current Assets 41,224 60,135

Total Insurance & Financing Operations

Assets 4,507 16,989

Total Fixed Assets 39,656 43,017

Non – Current Assets 5,660 28,742

Total Assets 91,047 1,48,883

Continue….
31st December 31st December
2008 2007
Total Current Liabilities 73,911 69,510

Total Financing & Insurance

Operations Liabilities 1,822 5,813

Long – term Liabilities 29,594 33,384

Non Current Liabilities 71,060 75,656

Total Liabilities 1,76,387 1,84,363

Less :- Accumulated Deficit 85,340 35,480

Total Liabilities 91,047 1,48,883
 Profit & Loss A/c
Figures in $ mn.
31st December 31st December 31st December
2008 2007
2006

Net Sales & Revenue 1,48,979 1,79,984 2,04,467

Costs & Expenses 1,70,263 1,84,293 2,10,290

Operating Loss ( 21,284 ) ( 4,309 ) ( 5,823 )

Net Loss ( 30,860 ) ( 38,732 ) ( 1,978 )

EPS ( 53.32 ) ( 68.45 ) ( 3.50 )

 Quarterly Result (Figures in $mn)
As on As on As on
31st Mar,09 31st Dec,08
30th Sept,08

Total Revenue 22,431 30,778 1,18,201

Gross Profit (2,180) (2,516) 892
Total Operating Expenses 2,576 4,820 14,840
Operating Income (4,756) (7,336) (13,948)
Non-Operating Expenses 1,305 1,455 6,649
EBIT (6,061) (8,791) (20,597)
EAT (5,947) (9,528) (21,626)
STRENGTH
 Company size & Market Share
 Technological Potential
 New Leadership
 Quality Improvement
 Acceptance of Improvised Model
 Structural Approach & Relationship
WEAKNESS

 Failure to implement technology.

 Too much Vertical Integration
 Bureaucratic Culture
 Product Design Problem
 Negative Effect of Downsizing
 High Cost of Production
 Relationship with UAW
Opportunity
 Use of knowledge gained from Saturn
experience and Toyota Joint Venture
 Expansion of their global presence
 Continue to build on the newfound customer

confidence
 Changing consumer demand for new model

types & styles

THREATS
 Domestic & Foreign Competition
 U.S. Federal Legislation & Regulation
 Consumer Lawsuits
 Foreign Legislation & Regulation
 Declining Quality of the Infrastructure in this

country
 Declining Value of the Japanese Yen
 FUTURE PLANING OF GM

 Introducing CHEVY VOLT.

 Planning to launch $4000 car.

 Trimming the number of factories and shedding

out jobs as well.

 Focusing only on a few brands.

 Wiping out common shareholder.

 US-owned GM plans to float IPO by July 2010

“ The Road is tough, but the
ultimate goal – a leaner ,
stronger , viable GM – is one we
share.”
-
Fritz Henderson (
CEO )
General
Motors.
LESSONS LEARNT
•Great works are performed not by strength but
by perseverance
•The only constant in this world is change, so we
need to be flexible
•A company should focus on its core activities
•A right decision at a wrong time ultimately
becomes a wrong decision
 Good deeds always pays off.
 When the cash cows turn into dogs , its better to sell
their meat and earn money out of it.
 We should be more realistic rather than being over
ambitious.
 Quality must never be compromised for the sake of
crown
References
Thank
You