The development of the automotive industry is probably the biggest revolution of the twentieth century along with Internet and telecommunications. Motor cars were invented in 1769 but we had to wait until 1890 to hear about the word "automobile". Since then, many car companies were born; cars and automobiles became the first means of transport in the world and became a way of life. Automobiles, apart from being useful and indispensable as a medium of transport, are also known to be a very common passion. Be it racing, Formula 1, vintage car rallies, cars featuring cutting edge technology, cars are loved by millions of people. The car industry hasn't stopped growing in more than a century. In 2006, one could count almost 600 million cars over the world, almost 1 car for 11 human beings .
But the industry has been facing difficulties since around 2008. Several factors can be pinpointed such as the increase in oil prices, pricing pressures from raw material suppliers, purchasing behavior, etc. The global car market is evolving very fast. In some countries, the market has witnessed a slowdown while in other countries, emerging countries, the market is growing quickly. Logically, the fastest growing markets for car manufacturers are China, Brazil and India, countries in the midst of an exponential economic development. These have recorded the maximum growth during the past five years.
The United States is the world's largest market for light vehicles, cars and light trucks (SUVs and pickups). In 2008, a total of 13.24 million vehicles were sold in the US and we count more than 247 million cars in the US. The industry is dominated by the "Big Three" automobile manufacturers: General Motors, Ford and Daimler-Chrysler. But with the crisis in the industry, GM left lost its number one rank to Japanese manufacturer Toyota. All "big three" are currently facing difficulties but GM has suffered more damage by the crisis; the group is on the verge of bankruptcy.
Through this paper we will analyze the situation of General Motors via a SWOT and PESTL analysis. This analysis will help us understand and relate to the causes of the GM failure, and report the strategic management decisions made by Rick Wagoner to save the company. The last part of the paper isdedicated to the formulation and implementation of strategic management recommendations for GM.
[...] In the case of GM the legal factor affected the group with the law on bankruptcy. The Chapter 11 of US bankruptcy code was pressuring the group since 2005, and to avoid being placed under the chapter 11's protection, the group had to take several measures and manage reorganization. Chapter 11's protection allows companies facing difficulties or bankruptcy to start over by neutralizing its creditors. This is processed via a bankruptcy plan proposed by the debtor and the creditor who approves or rejects it and proposes another plan. [...]
[...] They used to be more independent. The main aim was to reduce the firm's overall cost structure over the next coming years. Although the first competitor of GM is Japanese, the market is still open. In December 2006, Wagoner announced plans for the development of a hybrid electric vehicle that could be plugged on to be recharged. This car is almost out now and it is the Chevrolet Volt. a. Results and last actions The company completely fell apart, in 2008 GM was close to bankruptcy but Wagoner didn't want to face it. [...]
[...] • Reliability of cars It's known that GM cars are not the well working cars. Many cars have problems. • Investments: GM invested $80 billion in pension funds. But with the crisis, the company lost money of these pension funds. Opportunities: • Expansion of their global presence Continue to develop the brand in the emerging markets: China, India, Brazil, Africa. • Continue to build customer confidence • Green technologies With the new Chevy Volt (electric car) the group can lead the way to massive usage of electric cars in the future. [...]
[...] So he was aware of the type of top management in GM. But he decided to change the former management team and the first step Wagoner did to turn around the company was to be support it with a good management team. For example, he hired Robert A. Lutz who was retired to head the firm's crucial product development. Then, Wagoner decided to restructure some GM units through the world. For example, all the European units had to collaborate with each other, in term of marketing, designing and manufacturing cars. [...]
[...] Strategic Management recommendations a. Short term b. Mid term c. Long term Introduction The development of the automotive industry is probably the biggest revolution of the twentieth century along with Internet and telecommunication. Motor cars were invented in 1769 but we had to wait until 1890 to hear about the word automobile. Since then, many car companies were born; cars and automobiles became the first means of transportation in the world and became a part of our life. Automobiles, in spite of being useful and indispensable to move, are also known to be a very common passion. [...]
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