Background and History
General Motors (GM), a US-based automobile manufacturing company, was founded in 1908 and since that time bases its headquarters in Detroit, Michigan, USA. During its history that counts for over a hundred years of development and business activities, GM has managed to create branches located in 34 countries of the world (General Motors, 2009). Nowadays, GM can boast about over 450 million automobiles sold annually around the globe by the company alone and by its business partners in 144 countries of Europe, Asia, and America (General Motors, 2009). Thomas (2008) argues that GM has been the world’s leader in sales of automobiles and their spare parts for the last 77 years. The most famous automobile models currently produced by GM include Buick, Chevrolet, Hummer, Opel, and Saab. However, even being a world car manufacturing leader, GM has also experienced, and still continues to face, the negative effects of the global economic stagnation.
GM Organizational Structure and Management Model
GM is characterized by the horizontal organizational structure which is a multilevel one. The organizational structure of GM is headed by the Board of Directors consisting of 14 members. The next level of the organizational structure is the Chief Executive Officer Frederick A. Henderson, who is followed by the Senior Leadership Group constituted by 40 members, with the majority being Vice Presidents charged with the responsibility for every particular sphere of GM activities (General Motors, 2009). The next level of the structure of GM is the Staff Officers level comprised of 3 employees, i. e. a corporate secretary, a chief tax officer, and a general auditor (General Motors, 2009). Finally, the last organizational level is constituted by the 244,500 employees of GM employed in more than 140 countries in the world (General Motors, 2009). GM also cooperates with the US-based and international automobile manufacturers and is currently developing its strategic partnerships with such market players as Daewoo Auto & Technology Co., Suzuki Motor Corp., Isuzu Motors Ltd. of Japan, Chrysler LLC, Daimler AG, BMW AG, and Toyota Motor Corp (General Motors, 2009).
GM Analysis
Competition Analysis and Market Analysis
The automotive market in which GM operates is a rather competitive environment. The major domestic competitors of GM are Daimler-Chrysler and Ford Motor Company. Both companies have strong competitive advantages as Daimler-Chrysler is a manufacturer of the famous respectable trademarks of cars like Dodge, Mercedes, and Jeep, while Ford is an innovator of the automobile mass production and has a strong market position around the globe. The main international competitors of GM ate Honda and Toyota respected around the world as the manufacturers of high-quality cars (Thomas, 2008).
The analysis of competition and market environment of GM will be more detailed through the following SWOT Analysis and Porter’s Five Force Analysis that will consider more facts about the market environment and its developmental trends in the automotive industry:
Table 1: GM SWOT Analysis
Thus, it can be observed that alternative fuel cars, market share, customer base, and strong competition might be the strengths, weaknesses, opportunities for GM depending on the ways these phenomena are developed in the company. However, the major threats to the company include the effects of the global economic recession and better adjustment of the company’s competitors to these effects. Porter’s Five Force Analysis can help better understand the potential market development for GM:
Table 2: Porter’s Five Force Analysis
So, the great importance of the competition, bargaining power of customers, and threat of substitute products developed by the competitors serve as the determinant factors for realizing the position of GM in the current automotive industry, while the bargaining power of suppliers and threat of new entrants are of little importance and can hardly change the market share of GM in the American automotive market.
Products and Services, Pricing Policies
The range of the products and services that GM offers includes automobile production, maintenance, spare parts production, and GM merchandise production and sale. The variety of brands GM offers in the domestic and international markets includes the car trademarks like Buick, Chevrolet, Cadillac, SAAB, Hummer, and many others (General Motors, 2009). The company is also characterized by the flexible pricing policy that allows GM to be equally popular among the buyers of the expensive cars and the people looking for the cheap but high-quality vehicles. Thus, the prices for the GM vehicles range from the rather accessible $11,965, through the $30 – 40,000 cars, to the rather exclusive cars costing $115,670 (General Motors, 2009).
Regulation/Deregulation
It is an established fact that GM is a privately owned company, and the majority of its shares are controlled by the private investors. However, the considerable share of the GM performance is currently, under the conditions of the global economic recession and its effects upon the American automotive market, regulated by the US Government. According to Ikenson (2009), Posner (2009), and Thomas (2008), the development of GM is negatively affected by these regulations, especially the ones imposed on the company’s policies, production, and financial activities. For instance, operating as an independent business unit GM might restructure its production process and avoid the currently reported $2 billion of losses for 2008 (General Motors, 2009).Therefore, the above scholars consider GM as an excessively regulated company in need of substantial deregulation.
Risk Management
Being a reputable company, GM implements the set of risk management techniques that include market conditions analysis, competition analysis, market trends forecasting, and supply and demand analysis. However, Thomas (2008) argues that in the light of the current financial losses of GM the risk management policies argued about can be considered ineffective. Drawing from this, GM experiences the obvious need for new risk management techniques argued about by Thomas (2008). The author carries out the detailed analysis of the automotive market in the US and abroad, studies the competition of GM and the internal developmental trends in the company, and comes to the conclusions that GM needs to improve its forecasting, supervision of financial operations, investing only in potentially profitable projects, and cutting the expenses in the light of 2008 – 2009 crisis.
Capital Structure and Budgeting
The capital structure of GM is composite and rather complicated as the assets and debts of the company are comprised of the company’s activities, governmental assistance, obligations and GM shares. In more detail, the capital structure of GM consists of $62 billion of total debt, $65.1 billion of book equity, $4 billion obtained in the form of US Government funding, $27.8 billion of trade payable assets, $9 billion in global warranty obligations, and numerous other minor factors. Having considered these figures, it is possible to see the situation of the company’s debt outweighing its assets almost twice, and this evidence about the need for capital restructuring, which would be far more difficult under the conditions of the current governmental regulation (General Motors Corporation, 2008).
Conclusions
So, General Motors Corporation (GM) is one of the world’s leaders in automobile production and sales. The wide range of the products offered and the flexible pricing policy allow the company to have the extensive customer base in more than 140 countries around the globe, but the recent economic recession also displays its effects upon GM performance results. Complicated by the problematic organizational structure of the company and the threats of strong market competition, these effects prove the need for GM restructuring. The first two steps recommended for reaching this goal include the decrease of the governmental regulation in the company and improvement of its risk management policies.
Reference
General Motors. (2009) GM Corporate Website, General Motors Corporation. Web.
General Motors Corporation. (2008) Restructuring Plan for Long-Term Viability, Senate Banking Committee & House of Representatives Financial Services Committee, Web.
Ikenson, D. (2009) Will Government Motors do better than General Motors?, Los-Angeles Times. Web.
Posner, R. (2009) The General Motors Reorganization and the Federal Government, The Atlantic. Web.
Thomas, C. (2008) General Motors’ Strategic Analysis, Amrita School of Business, SCRIBD. 2009. Web.