Strategic Plan (general Motors)
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Running head: Strategic Plan
Strategic Plan (General Motors)
MBA580
University of Phoenix
Executive Summary
General Motors (GM) has been a leader in the auto industry which over the past few decades has continued to lose market share to foreign competition. The current weak U.S. economy combined with rising fuel prices and increased political pressures regarding global warming, presents several challenges to GM and the entire auto industry. These current challenges provide exciting opportunities for the auto company who can quickly develop and produce alternative fueled vehicles. The global auto industry will continue to grow with 80% of the global auto industry’s growth from now until 2012 is expected to come from emerging markets. However, for GM to succeed they will need to address several internal issues regarding legacy costs, unions, and the development of a wide range of alternative vehicles that consumers deem are “must have” vehicles.
Looking to the future GM has a global presence in these critical emerging markets, and have the knowledge and expertise in alternative vehicle technologies required to move the company forward. For GM to achieve the vision of being synonymous with alternative vehicles (fuel celled hybrid, ethanol, and electric / battery). When consumers think of the innovative technology in the auto industry they think of GM! For this to happen GM can no longer be a quick follower, but must be an industry leader in technological advances in the auto industry. GM must offer a variety of alternative vehicles that meet consumer demands and government regulations.
GM has significant fixed costs and large capital investment needs, so cash flow is the lifeblood and should be considered in every decision which could impact our expenses or require a capital investment. By 2010, GM expects to reduce structural cost as a percent of revenue to only 25%, and by 2012 to only 23%; these would be considered benchmark levels of cost.
GM reduced its structural cost by $9 billion in GMNA between 2005 and 2007, and these cost reductions will need to continue to fund the research, development, and production of alternative vehicles. Also important are GM’s efforts to grow revenue in emerging markets, while at the same time being as efficient as possible in managing GM’s structural cost base to support this growth. The global auto industry market is growing, and the opportunity for GM to recapture market share lost in the past few decades is there for the taking. GM can win, and to do so needs to expedite change to meet the challenges and seize opportunities.
Company Background:
“General Motors Corp. (NYSE: GM), the world’s largest automaker, has been the annual global industry sales leader for 77 years. Founded in 1908, GM today employs about 266,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling.” (GM.COM web site)
GM needs a sense of urgency regarding revising a strategic plan that incorporates the next generation of vehicles. In today’s global economy and highly competitive auto industry GM has no time to procrastinate. As stated so clearly by Dean Harlow, GM has just too much at risk in not becoming an industry leader in alternative fuel technology. “Fuel-economy legislation is sparking the race, Dean Harlow, president of engineering firm Ricardo Inc., said last week at the Automotive News World Congress. “Just as Kennedy pushed NASA to the moon in a decade, Washington has now thrown down the gauntlet for the auto industry,” said Harlow. He was a member of a panel discussing the risks and opportunities of “green technologies.” “Were in a race for eco-innovation,” he said. But without more investment, alternative vehicle technologies and development of hydrogen-powered cars will leave the United States, the head of General Motors fuel cell activities warned. Other countries are investing heavily in green technologies and could surpass the United States, GM scientist Byron McCormick said. “There is a real chance that could happen. If that happens, what happens to the jobs, to the learning and the skills that go with it?” (Allen, 2008) This is a critical time in auto industry with many threats, but opportunities as well.