Jai Ganesh-group 9

8/8/2019 Jai Ganesh-group 9

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General Motors 2005

K. Jai ganesh

A . Srilaksmi

P . Parathasarathy

B . Ashwini


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INTRODUCTION :

GENERAL MOTORS(GM) is one of the largest industrial

corporationsin the world.

In 2005 325,000 People globally.

In 1995 700,000 People .

Operations 32 countries, 9 million vehiclesin 200 countries.

Least profitable global carmakers.

Its R O I:1% ,where Toyotas R O I : 6% .


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GMS ORIGINS :

GMwas founded on sep 16,1908 by William C.Durant.

SPECIALITY: * Hundreds of models were produced .

* Expensive cars.

* Targeted at wealthy customers.

o Principal Competitors : FORDMOTOR CO.,

o SPECIALITY: *Model T Cars.

*Mass production technology.

* one model of carsin large quantities.


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In 1920,Alfred P.Sloan took control ofGM.

Before 25 car companies.

100s of models.

no specific suppliers.

cost high.

economies ofscale not obtained.

After reduced to 5 major car divisions :

* Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac.

Objective : * Assigning own responsibility.

*

Autonomy, decentraliz

ed.

Outcome : 1925 1975 Market leader.


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1970s : Big changesin the global CARindustry.

Japanese entered.Aimed to reach maximum market.

Low cost.

More fuel efficient vehicles.

Also European countriesstarted to enter,

- BMW

- JAGUAR

-MERCEDES


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GM FIGHTS BACK

1978 1980 : New CEO , Roger Smith.

Lean production system.

Automate the factory.

Problems : Robots break down.

Stops the production.

Cost increase.

No orientation before.


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SATURN PROJECT :

1982 : Saturn project framed to beat Japanese in the

market.

Adopt Japanese strategy .

Aimed at low cost, high quality.

Outcome : Failure .

GM realized at last, Saturn never could match the low

costs of Japanese manufacturers.


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STRATEGIC ALLIANCES :

Started to collaborate with Toyota and Honda.

1983 Joint venture with Toyota, called

New United Motor manufacturing Inc.

Produced Chevrolet Novasin California.

Expectations : Gm CAR qualities will increase .

Knowledge on lean manufacturing system.

Outcome : Failure

Reason : Bad labour, not flexible.

1984 : Toyota opened the same company in Japan.

productivitiesincreases twice.

Competitors namely Ford & Chrysler adopted lean manufacturing

system. And gain more market than GM.


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CHANGINGITS STRUCTURE

In 1980 GMWas Forced To Change The Structure.

Japanese Company Operate With Flat And Steam Lined Structure.

Gm-withMultidivisional Structure. They Realized Gm Had Reduced TheirCompetitive Advantage.

First Each Division Performed Its Own Work And Input Independently.

Second Each Division Produced Cars In Its Traditional Way.

More Expensive - Each Plate Form Require Different Inputs.

Bureaucratic structure also slowed innovation .

its take long time to adopt new technological advances.


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THE 1984 REORGANIZATION

In 1984 GM consolidated its 5 powerful autonomous vehicle

division into 2 business groups.

The goal behind the change was to reduce costs.

New level manager (BOG group manager) .

Basic problem decision made by central engineering and

manufacturing staffs instead of 5 divisions.


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CONTD

GMs new model failed though design time reduced , the

result was poorer.

Benefits of R&D, purchasing were realized but controlled at

group level.


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IN 1988 REORGANIZATION

Cadillac division benefited new policy of

decentralization.

Cadillac was granted its own engineering team in

1988.

He wassuccessful in launching redesigned modelsin1991,1992,1993 and theirsales rose over time.

GM

i

mplemented major plan gm10 program.


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Oldsmobiles cars were similar to Buicks.

By 1992,with falling sales the future of the Oldsmobiledivision.

GM

finally announced ,

it would clo

se th

isdivisi

onoperations.

the result wasin 1980s Japanese carmakers

continuously gained market share mainly stealing salesfrom gm.


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Japanese company dominated small-to medium size

car market decided to compete in luxury segment.

GMintroduced 16 new vehicles ,


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NEW TECHNOLOGY DEVELOPMENT


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EDS helps customers develop and computer hardware andsoftware to match their needs.

GM four business Segment:

1) 32% automotive

2)18% telecommunication

3)44% defense4)6%commercial

EDS with its experience in CAM whose strength is data

processing


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Integration of Engine Groups to eliminate Redundancy

GMs goal was to achieve economies ofscale by integration of

Engine groups around the world.

Improve vehicle design and develop new models to target

profitable market segments.

Change ofGlobal Organizational Structure to GlobalMatrixStructure.

Creation of new Vehicle Engineering Center


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IT ROLE

It plays a vital role in gm.

It provides betterinformation to manage complex problems.

Using software,consultancy services from ibm it harmonized across the company.

Fast coordination in design and engineering.

Engineers can share the information globally to reduce the cost and improve theprofit.

Increaes the efficiency ofsupply chain operations.


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GM EXIT

In the year 1980 gm bought several companies, in order to promote the efficiency,

and also get benefits.

In 1990 sold its vehicle business assets.

In 1999 sold its defense units.

In 1994 Hughes Electronics Division developed on star technology,and DIRECTTV

in us.

In 2004 it hassold to news corp.


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GLOBAL EXPANSION

In 1990 steps to bolster its global presence

JOINT VENTURES

with Japanese companies to learn lean manufacturing techniques

Acquired 20% equity stake in Fuji, the manufacturer of Subaru brand vehicles

Strategic alliance with Honda

Strength its presence in Chinese and Eastern Europe Alliance with a Russian

company to produce a line of low cost Chevrolets

GM entered into Asian, Chinese and South American market

STRUGGLES

Fiat alliance wasill-fated - $2 billion to terminate its option

Saab expensive acquisition and lost hundreds of millions of dollars

Opel, Vauxhall struggling to compete effectively


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NEW COMINGS

Buick Sail first modern family car

Launch of Chevrolet Cruze

Four different vehicle models of Opel division

PROBLEMS Difficult to meet the challenge of global competitors

Because of heavy competition among global car makers, profit margin

becomes low

Brand and market


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BRANDS AND MARKETING

Focusits resources on new models of cars and trucks.

Separate marketing strategy to differentiate its vehicles

Chevrolet division

Invested hundreds of millions to promote its brand name

New diversity marketing and sales organization to focus on the womens market

CTS Cadillac design

Introduction of ten new or restyled midsize vehicles


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Intensive marketing campaignsin National media outlets

CRM resulted in top quality ratings ofits new full size and mid size cars

Take home and drive

UNFAVOURABLE DIVISIONS Olds mobile is gone

Saturn experienced declining sales

End production of Chevrolet camaro and Pontiac fire bird


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NEW LEADERSHIPBUT SAME OLD PROBLEMS

In 2000

Rick Wagoner became its new CEO

Jacksmith as Chairman

Gary L.Cowger, vice president

In 2003

Rick Wagoner became as chairman and CEO

Extensive background in global operations helped promoterGMs globalrevival


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PROBLEMS

Payment to current workforce is much more than its competitors

Profit margin are extremely low

Sales was 1.5% where ROIC is 1%

Price war with Ford, Honda and Volkswagen

Discounting Strategy

In 2000- Bad news forGM

Introduction of new and improved SUVs & trucks by Japanese automakers

Hydrogen fuel-cell technology-impractical

GM fight continues

Can they catch up Japanese car makers


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SWOT ANALYSIS:

Strengths (S):

Global market coverage.

340,000 employees world wide.

Number of plants.R&D and technology potential.

Production and capacity potential.

Weaknesses (W):Decline in Global and U.S Market share.

Inappropriate marketing strategy (Push strategy)

Too much Health cost and Retirement expenses.


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COND

Opportunities(O):

Hybrid and Hydrogen car technologies

Expansion in China market.

Threats(T):

Intensity rivalry among competitors.

Competitors R&DAdvantage position.

Competitors product Quality.

Competitors customer profile.


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Jai Ganesh-group 9

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