General Motors

GENERAL MOTORS Presented By : Arvind Kr. Popat.

E-mail : [email protected]. Master School Of Management , Meerut.

GENERAL MOTORS AN OVERVIEW Year of Establishment 1908 Year of Christening as GM Corporation 1916 Name of the Founder William Durant Company Headquarter Detroit, Michigan, United In States Operation

33 countries No. of Employees 3,27,000

Key People of GM CEO Fritz Henderson. Chairman

: :

Ed Whitacre Vice Chairman Robert VC A. Lutz. CFO & Executive

:

Ray G. Young

:

Present Owners vUnited States Treasury 61 % vUnited Auto Workers VEBA 17.5 % vCanadian & Ontarian Governments 11.7 % vBondholders of Former GM

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.

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, market collapsed.

after the new vehicle

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 :WallWall Street crash put an abrupt stop to all 1929 :- The TheGreat Great Street crash put an abrupt expansion plans at GM. Stock Price badly. stop to all expansion plans atfell GM. Stock Price fell badly. 1930 :- GM bounced back and bought the Yellow Coach bus company.

1930 :- GM bounced back and bought the Yellow 1930 :- bus It also bought Electro- Motive Corporation, the internal Coach company. combustion engine railcar builder.

1955 :December, 1955, is another landmark in the 1930 :- 31 Itstalso bought ElectroMotive history of GM. The company to make moreengine than a billion Corporation, thefirst internal combustion dollars inbuilder. a year. railcar

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.

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

•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:

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

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 brandsChevrolet, 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 vNot filing for Bankruptcy sooner. vHuge legacy expenses such as high cost of pensions and health care . vOver reliance on gas guzzlers , Mediocre product quality & Unimpressive design . vRevolution of Shareholders/ Institutional Investors for high payout. vDriving incentives into the ground . vSelling control of GMAC. vTimid & Poor management. vLess attention to R&D and innovation.

Reasons for downfall vKilling the EV1 electric program. vIgnoring Jerry York. vMishandling Fiat . vThere were no. of litigation & lawsuit against GM during 2003-08 . Such as – Green House Gas Lawsuit. vEmphasis on manufacturing big cars and SUVs . vCarrying of non-profit contributors. vGM’s top selling Chevorlet division to launch SUVs this year ,where the rivals launch it 4 yrs

Impact of GM’s Bankruptcy vGM Bankruptcy send the rallying market into reverse. vGM will layoff thousands of employee to reduce cost. vSlashing the number of dealership. vCompetition will be stronger for GM due to downsizing . vMany dealers lost their confidence and have

Continue…..

vGM’S bankruptcy could impact Indian service providers in a small but significant way, immediate impact being delayed payment and ramped down existing project. vThere will be adverse impact on US steelmaker. vThe GM fiasco will boost up the confidence of Asian Auto maker to increase their market share. vGM customers may suffer severe cutbacks

Principal Competitors of GM & market share in US.

Note :

Above data related to passenger car & trucks.

Comparison of Industry v/s GM sales

Comparison of the new and the old General Motors

Survival strategies for GM vRevise GM’s sales projection. vMake more fuel efficient cars that burns less gasoline. vTrim models from 48 to 36. vLaunch new models in market which are customer friendly . such as “Chevorlet Cruze” v Invest in passenger cars. vDitch half of its brands.

Survival strategies v Development for GM of alternative fuel vehicle. v Development of Hybrid or Eco-friendly car. v

Reduce compensation and headcount.

v Reduce the no. of Retail Channel and Dealer network. v Sale some of businesses v

Give more responsibility to Managers.

Overview of Financial Aspect Revenue

:

US$ 148.979 billion (2008) Operating Income

:

US$ 21.284 billion (2008) Net Income

:

US$ 30.9 billion (2008) Total Assets

:

FINANCIAL HIGHLIGHTS 31stDecember 2008 Total Current Assets Total Insurance & Financing Assets 4,507 Total Fixed Assets

31stDecember

2007

41,224

16,989

60,135 Operations

39,656

43,017

Non – Current Assets

5,660

28,742

Total Assets

91,047

1,48,883

Continue…. Total Current Liabilities

31stDecember 2007 73,911

Total Financing & Insurance Operations Liabilities

1,822

2008

31stDecember 69,510 5,813

Long – term Liabilities

29,594

33,384

Non Current Liabilities

71,060

75,656

1,76,387

1,84,363

85,340 91,047

35,480 1,48,883

Total Liabilities Less :- Accumulated Deficit Total Liabilities

Profit & Loss A/c Figures in $ mn. 31stDecember

31stDecember 2008

31stDecember 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 )

( 53.32 )

( 68.45 )

( 3.50 )

EPS

Quarterly Result (Figures in $mn) As on

As on 31stMar,09

As on 31stDec,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)

30th Sept,08

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



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