Paritosh Agarwal - SM

Paritosh Agarwal 01 1

H.R. College of Commerce and Economics

M.Com. Part 1 Semester 1

Paritosh Agarwal 01

September 29, 2014

Strategic Management General Motors Company

ACKNOWLEDGEMENT

I express my sincere regards to my parents and friends who have rendered their cooperation

in compiling this project on General Motors Company and conducting research. I would also

like to express my gratitude to the subject Professor, Dr. Navin Punjabi for his guidance and

encouragement in making this project a success.

INDEX

Sr. No. Title Page No.

01. History of General Motors Company 02-05

02. About General Motors Company 06-09

03. Vision and Mission Statement of General Motors Company 10-10

04. S.W.O.T. Analysis of General Motors Company 11-15

05. Business Strategy of General Motors Company 16-22

06. Challenges faced by the new General Motors Company 23-25

07. Corporate Restructuring Plans of General Motors Company 26-28

08. Conclusion 29-29

09. References 30-32


History of General Motors Company

At the turn of the 20th century there were fewer than 8,000 automobiles in America, many of

them powered by steam or electricity, others had gasoline engines. An unexpected turnout at

the first New York Auto Show in 1900, showed the magnitude of the publics fascination

with the automobile. Over the next few years, hundreds of fledgling companies would try to

meet the demands of a growing market.

General Motors (GM) was founded by William Billy Durant on September 16, 1908.

Durant had become a leading manufacturer of horse-drawn vehicles in Flint, Michigan before

making his foray into the automobile industry. At its inception GM held only the Buick

Motor Company, but in a matter of years would acquire more than 20 companies including

Oldsmobile, Cadillac, and Oakland, today known as Pontiac.

In Germany, a company named Opel began by manufacturing dependable sewing machines.

Opel became a brand recognized worldwide after adding bicycles to their product arsenal. In

1899, Opel entered the growing automobile market with the Opel-Patent-Motorwagen

System Lutzmann and became a part of GM thirty years later. (General Motors, n.d.)

Earlier inventions such as the electric light bulb, the telephone, and the radio marked a new

era of possibilities. In particular, the automobile sent the imagination racing and expanded the

horizon upon which people could dream. As demand for automobiles grew to unexpected

heights in the 1920s, General Motors set the pace of production, design, and marketing

innovation for others to follow.

Adding Chevrolet, Vauxhall and Opel, diversified the selection and added to the reach of

GM. With the philosophy and strategy of a car for every purse and purpose, and a series of

landmark innovations that changed the automobile itself, GMs vehicles went beyond

transportation, becoming statements and aspirations in their own right. During these years

GM also opened more than a dozen new plants outside the United States.

The milestone 1927 Cadillac LaSalle, with curves rather than sharp corners and a long, low

stance, made people see cars as far more than just a mode of transport. Designed by Harley

Earl, the LaSalle was a world apart from the high and boxy Ford Model T, marking the

beginning of true automotive design. (Pound, 1934)


Hard times in America and political change in Europe throughout the 30s brought new

uncertainty, but GMs commitment to innovation continued unabated. The return of peace

following World War II brought a new optimism with consumers eager for goods that had

been out of reach for so long. GM responded with an unprecedented string of milestone

designs that continue to inspire to this day.

In addition to innovations like independent front wheel suspension unibody construction, and

the one-piece steel roof, GM pushed the envelope in design with a succession of vehicles

including the 1949 Buick Roadmaster, the Chevrolet Corvette and BelAir, and the 1959

Cadillac El Dorado. These machines were as much fun to drive as they were to see drive by.

During the war GM supplied the Allies with more goods than any other company. In 1940,

former GM President William Knudsen was chosen by President Roosevelt as Chairman of

the new Wartime Office of Production Management. By 1942, one hundred percent of GMs

production was in support of the Allied war effort. GM delivered more than $12 billion worth

of materials including airplanes, trucks and tanks. (Sloan, 1964)

The 60s and 70s were a time of new challenges and great change. Environmental concerns,

increased as prices and foreign competition led to an unprecedented downsizing of vehicles

across all GM vehicle lines. It was the largest reengineering program ever undertaken in the

industry, ushering in an age of lighter, aerodynamic and more fuel-efficient vehicles.

In 1971, GM pioneered the use of engines that could run on low-lead or unleaded gasoline.

Two years later, General Motors was the first to offer an air bag in a production car. In 1974,

GM introduced the most important step in reducing emissions with the catalytic converter.

This technology, shared by General Motors, is still used by the entire auto industry.

There were storm clouds on the horizon, however. Germany and Japan, now recovered from

the devastation of World War II, began exporting cars to the U.S. in larger numbers, and fuel

price shocks sparked consumer interest in these new, more fuel-efficient vehicles. GM

rushed to develop smaller vehicles as well, but the company had been too large and too

successful for too long to change direction easily, and GMs undisputed dominance of the

U.S. market began to erode.

Although General Motors was always active internationally, the 1980s and 1990s brought a

new urgency for GM to operate as a single global company, to improve the efficiency of its


operations and better compete with global competitors. GM also began a series of

reorganizations in North America that led to a single business unit there.

In 1982, GM marked its largest single production expansion outside of North America with

the opening of the new complex in Zaragoza, Spain. This facility immediately began building

the fuel-efficient Opel Corsa. With joint ventures in China and India plus the additions of

Saab and HUMMER to the GM family, the company expanded both the reach and variety of

vehicles sold worldwide.

1995 was a big year for GM. Annual vehicle sales outside North America exceeded three

million units for the first time. Five million vehicles were sold in the United States that year

and GM entered into its first joint venture agreement in China. By the end of the 90s, the

foundation for global growth in the new millennium had been set.

During this period, GM also formed NUMMI, a joint-venture with Toyota, and Saturn,

a wholly new company focused on creating a new small car and a new way of doing

business. Lessons from these and other innovations were spread throughout GM, and the

company benefitted from a truck boom that saw millions of Americans adopt SUVs as their

family transportation. However, legacy costs from earlier years continued to weigh on the

company, and Japanese, German, and Korean competitors pushed into the lead in most

passenger car segments. (General Motors, n.d.)

By the start of the new millennium, GM had built a strong presence in emerging markets such

as China and Brazil, and had largely completed its transformation into a single global

company. The creation of GM Daewoo in 2002 gave GM a new organization specializing and

engineering and manufacturing smaller cars, proving an important boost to Chevrolets

growth as a global brand. The design and quality of GMs new cars improved significantly,

but GM found it difficult to regain share from its offshore competitors, and legacy cost from

GMs decades as a larger, less efficient company continued to weigh on financial results.

It was also a period of tremendous innovation at GM. The company continued to push ahead

with electric vehicle technology, developing a series of hydrogen powered fuel-cell concept

and demonstration vehicles. Then, in January 2007, GM shook the industry with the

Chevrolet Volt concept, a vehicle that could drive on battery power for daily commuting,

then continue operating with a range extender when the battery charge was depleted. The first


production Volts were delivered to customers in December 2010. GM also became an

industry leader in flex-fuel vehicles, which can run on either gasoline or E85, and developed

a sophisticated two-mode hybrid system to significantly extend the economy of full-size

trucks and SUVs.

Notable new models included the Chevrolet Aveo small car, the Chevrolet Equinox

crossover, and the Pontiac Solstice and Saturn Sky roadsters. The new Saturn Aura and

Chevrolet Malibu put GM back into the thick of the midsize car fight, and the Cadillac CTS

began a renaissance at Cadillac that is gaining momentum to this day.

However, in 2008, a major recession and global credit crisis drove car sales to near

depression levels and dried up private sources of capital. GM, critically short of operating

cash, received a bridge loan from the U.S. Treasury, under the conditions that the company

further accelerate a tough restructuring of its operations that had been underway for several

years. (General Motors, n.d.)


About General Motors Company

The new General Motors are passionate about designing, building and selling the worlds best

vehicles. This vision unites the company as a team each and every day and is the hallmark of

its customer-driven culture.

The story began on November 18, 2010, when GM completed the worlds largest initial

public offering, emerging with a solid financial foundation that enabled to produce great

vehicles for customers and build a bright future for employees, partners and shareholders.

Leading the way is GMs seasoned leadership team who sets high standards for the company

so that it can give their customers the best cars and trucks. This means that GM is committed

to delivering vehicles with compelling designs, flawless quality and reliability, and leading

safety, fuel economy and infotainment features. All are intended to create that special bond

that can only happen between a driver and their vehicle.

Making the worlds best vehicles can only happen with the worlds greatest employees. GM

takes great pride in the undertaken work, and take great care to deliver exceptional cars and a

positive ownership experience to customers around the world. (General Motors, n.d.)

GM makes a strong commitment to customers, employees, partners and other important

stakeholders. GM proudly states its five principles that guide the company in everything they

do:

1. Safety and Quality First: GM states that safety will always be a priority. Continuing to

emphasize safety-first culture in its facilities, and as business grows in new markets.

GMs safety philosophy is at the heart of the development of each vehicle. In addition

to safety, delivering the highest quality vehicles is a major cornerstone of the promise

to its customers. This is why vehicles go through extreme testing procedures in the

lab, on the road and in production facilities prior to being offered to customers.

Developing high-quality cars, crossovers and trucks begins with the customer in

mind.

At GM, its about getting everything right for customers from the design, engineer

and manufacturing vehicles, all the way through the ownership experience.


GM is proud to have been recognized by J.D. Power and Associates with an industry

leading eight 2013 Initial Quality awards. Chevy, Buick, GMC and Cadillac all took

home awards and honored GMs commitment to quality was recognized.

The J.D. Power Initial Quality award means even more because its based on driver

feedback. After all, the satisfaction of customers is behind everything that GM does.

GM continues to drive a quality focus deeper into the company, across all disciplines

from Design, to Engineering, to Manufacturing and Sales and Marketing. It is an

enterprise-wide approach to quality where every employee plays a role. (General

Motors, n.d.)

2. Create Lifelong Customers: GM leaves no stone unturned to earn the confidence and

loyalty of its customers. Listening to customers to make sure their needs are met, and

are connecting with them on their terms. Throughout the relationship with customers,

GM strives to create passionate brand advocates who love their vehicle and freely tell

others about their experience.

3. Innovate: GM keeps pushing boundaries to be creative and lead in everything that

they undertake. From implementing the smallest improvements to executing big

ideas, GM is constantly increasing its competitive advantage to delight and excite the

customers.

4. Deliver Long-Term Investment Value: By developing the worlds best vehicles,

building upon GMs strong financial foundation, growing the business and operating

with the highest level of integrity, GM swears to continue to deliver positive results

and to retain the confidence of its shareholders in the company.

5. Make a Positive Difference: GM strives to make a difference in its world of

innovation and work. Whether finding new ways to improve business operations,

achieving as part of a team or volunteering in the community, GM ensures that

momentum is tied to positive change.

General Motors Team

The GM team led by CEO Mary Barra, shares a passion for customers and a competitive

spirit that drives towards excellence. Gms culture - one which represents diversity, inclusion,

mutual respect, responsibility and understanding - welcomes fresh perspectives and varied

experiences.

http://www.gm.com/quality.html


GM has 212,000 plus employees which work in 396 facilities touching six continents,

speaking more than 50 languages and touching 23 time zones. From designing and

engineering state-of-the-art plants and developing new vehicles and technologies to creating

new marketing programs, the team members are valued for their unique contributions.

Serving as the face of the new GM in communities around the world, 21,000 dealers are also

important members of GMs team, and are integral to its success.

General Motors Brands

From electric and mini-cars to heavy-duty full-size trucks, monocabs and convertibles,

General Motors dynamic brands offer a comprehensive range of vehicles in more than 120

countries around the world.

Along with its strategic partners, GM produces cars and trucks, and sell and service vehicles,

through the following brands: Chevrolet, Buick, GMC, Cadillac, Baojun, Holden, Isuzu,

Jiefang, Opel, Vauxhall and Wuling. GM also has significant equity stakes in major joint

ventures in China including SAIC-GM, SAIC-GM-Wuling, FAW-GM and GM Korea.

Whether in Detroit, Frankfurt, Sao Paulo or Shanghai, GM brands make an emotional

connection with customers from the very first time they get behind the wheel in any corner of

the world.

General Motors Technology

GM is expanding its leadership in vehicle electrification with advancements in batteries,

electric motors and power controls. The GM team is also working on a range of high-

volume, fuel-saving technologies including direct injection, variable valve timing, turbo-

charging, six-speed transmissions, diesel engines, and improved aerodynamic designs.

General Motors has always been driven by bold imagination and focused, disciplined action

to realize the power of those ideas. It is part of its DNA to realize technology's potential for

positive change and to share that vision with the world.

Its engineers, designers, and planners live years in the future, imagining a future where cars

carrying loved ones never crash; where empty cars can be sent to pick up friends; and where

cars dont break down, leaving the customer stranded.

http://www.wulingmotors.com/


GM is looking into the future, to a time when vehicles will no longer pollute; when they use

only fuels made from renewable sources or run on electricity. It is building technologies into

vehicles so they never get trapped in a traffic jam, can anticipate and avoid collisions, and

that can safely take over the driving for sleepy, busy or distracted drivers. (General Motors,

n.d.)

General Motors Commitment

GM believes in acting responsibly across the globe and focus efforts in important areas,

including the environment and education. The General Motors Foundation helps achieve this

goal by strengthening communities across the United States through investments in

education, health and human services, environment and energy, community development and

worldwide disaster relief efforts. Over the past ten years, the foundation, fully funded by a

GM endowment in 2000, has donated more than $315 million to send students to colleges,

keep teen drivers safe, educate parents on child passenger safety, promote diversity and

support vital non-profit organizations. The dedication reaches further than compliance with

the law to encompass the integration of sound environmental practices into business

decisions. Guided by environmental principles, GM considers the environment throughout all

aspects of its business, from supply chain, to manufacturing, to the vehicles put on the road.

These are the principles that help frame planning and decision-making for General Motors

future:

1. Committed to restoring and preserving the environment.

2. Committed to reducing waste and pollutants, conserving resources and recycling

materials at every stage of the product life cycle.

3. Actively participate in educating the public about environmental conservation.

4. Vigorously pursue the development and implementation of technologies to minimize

pollutant emissions.

5. Work with all government entities for the development of technically sound and

financially responsible environmental laws and regulations.

6. Continually assess the impact of facilities and products on the environment and

communities and operate with a goal of continuous improvement.

General Motors is committed to continuous improvement and making a difference. (General

Motors, n.d.)


Vision and Mission Statement of General Motors Company

Vision - To be the world leader in transportation products and related services. We will earn

our customers' enthusiasm through continuous improvement driven by the integrity,

teamwork, and innovation of GM people.

Mission - to provide products and services of such quality that our customers will receive

superior value while our employees and business partners will share in our success and our

stock-holders will receive a sustained superior return on their investment. (General Motors,

n.d.)


S.W.O.T Analysis of General Motors Company

General Motors Company, one of the worlds largest automakers, traces its roots back to

1908. With its global headquarters in Detroit, GM employs 204,000 people in every major

region of the world and does business in some 140 countries. However, most recently the

global recession has had a devastating impact on its, cash flows, financial condition and

operations. To survive, the company has had to accept a government bailout plan and its

employees the United Autoworkers of America, has also made concessions. This S.W.O.T.

analysis is about General Motors. (Friesner, 2014)

Strengths

1. Global presence General Motors truly has an international presence with factories in

Poland, Russia, South Africa Ecuador, Egypt, Germany, Argentina, Australia,

Belgium, Brazil, China, Colombia, South Korea, Spain, Sweden, and Thailand. The

company is even in Vietnam. In addition, it also has assembly, manufacturing,

distribution, office and warehousing operations in 55 other countries. GM was the

leading auto manufacturer in terms of sales for 77 years until 2007. The business has

grown its presence in the world and is now operating in 157 countries, while its

Chevrolet brand reached world record sales (4.95 million units).

2. New vision and strategy After 2008 bailout, GM has experienced major changes and

reorganized the way it does business. New members were appointed to the firms

management team with Daniel Akerson as the CEO. He shook GMs bureaucratic

organizational culture and introduced new strategy and visions to the business. GM

became smaller but leaner and is becoming more cost competitive.

3. Strong brand portfolio Born in Detroit Michigan in 1910 General motors has

produced a stable of automobiles such as Chevrolet, Pontiac Cadillac and Buick

which have become household names in the U.S. As such, the General Motors Brand

is well rooted not only in America but throughout the world. GM currently sells 18

automobile brands to satisfy as many customer needs as possible. The most popular

brands are Cadillac, Buick, GMC and Chevrolet that sell very well in USA and China.

Chevrolet reached a global sales record and sold 4.95 million units in 2012.

4. Strong presence in China China is the largest automotive market and is an emerging

economy that grows steadily. It is also the second largest market for GM in terms of


vehicle units sold. An early entrance into China, well performing partnerships and

local Buick brand are the main reasons why GM has a strong position in Chinas

automotive market.

5. Knowledge of home market GM is the largest car manufacturer in US and currently

holds more than 18% market share. This is mainly due to extensive knowledge of US

market and its consumers.

6. Four well performing brands GMs Cadillac, GMC, Chevrolet and Buick are among

the best-selling brands in US and China and brings in more than 80% of all General

Motors sales. (Times Reporter, 2014)

Weaknesses

1. High cost structure GM has one of the highest cost structures compared to all

automobiles manufacturers. GMs costs are driven by its generous employee

compensation and pension plans. Although GM has reduced its cost after 2008 it still

has a lot to do to become cost competitive.

2. Brand dilution GM controls 18 automobile brands that vary in quality and are sold

in separate markets. With so many brands in sales, customers find it hard to identify

which brand belongs to GM family, as only one of 18 brands carry GM letters. The

result is lower GM brand awareness.

3. Bureaucratic culture Before reorganization in 2008, GM was infamous for its rigid

culture and structure. Since then, the company has made some cultural and structural

changes but should continue improving as it isnt as quick as its competitors in

reacting to constantly changing environment.

4. Car recalls Last year, General Motors recalled 119,000 pickups due to missing hood

latch. The same year it had to recall it Chevrolet Volt and fix battery problems.

Recalls are expensive and damages brand reputation, especially when the company

announces them so often.

5. Diminishing Dealer Network General Motors has compiled a list of more than 1,000

dealerships market for closure. The company has announced that it will not renew its

franchise agreements with nearly one quarter of its U.S. dealerships. As of December

31, 2008, GM had 715 dealerships in Canada, as recent as May of 2009 plans called

for a anywhere from 40 to 200 closures.


6. Insufficient Liquidity General Motors has experienced a reduction in liquidity to

$14 billion in FY2008 from $27.3 billion in 2007. Losses are attributed to lower sales

volumes and a reduction in working capital. Both research and development, as well

as relationships with suppliers are negatively affected by the reduced liquidity.

7. Inadequate Performance among Some Business Segments In 2008 the GME

segment accounted to 21.8% of the total revenues and its revenues decreased 8.8% to

$32,440 million. Other business segments experiencing declines include GMNA

which fell 23.9% to $82,938 million, and GMAP which stood at $12,477 million for

FY 2008, a decline of 15%.

8. Low Debt Ratings Four independent credit rating agencies assess GMs debt ratings

and ability to pay interest, dividends and principal on securities. Moodys Investor

Service, Fitch Ratings DBRS and Standard & Poors evaluate GM. As of 2008, all four

had downgraded their assessment ratings for GM.

Opportunities

1. Positive attitude towards green vehicles Today consumers are more aware of the

negative effects (air pollution) caused by cars fueled by petrol and diesel. Large

quantities of CO2 emissions intensify greenhouse effect and negatively impact the life

on earth. Thus, consumers are more likely to buy new hybrid and electric cars that

emit less CO2.

2. Increasing fuel prices Increasing fuel prices open up large markets for GMs hybrid

and electric cars as consumers shift towards cheaper fuel types.

3. Changing customer needs By introducing new car models, General Motors would

be able to meet changing customer needs for smaller and more fuel-efficient cars.

4. Growth through acquisitions GM has successfully acquired many car companies in

the past and should continue doing so to gain new skills, assets and access to new

markets.

5. Growth Potential in India and China There are positive projects for GM business in

China and India. In China the market for new cars is in the midst of a 14% growth

rate projected to reach over $97 billion in 2008. Meanwhile in India, the market for

new cars grew by 15.5% in 2008 to a dollar value of $28 billion. A sign that India will

play an even bigger is the projected increase to 2.5 million units by the end of 2013.


6. Increased Global Truck Market Steady growth rates are projected in the next few

years. The markets volume is expected to rise to 21.5 million units by the end of

2013. The light commercial vehicles segment was the markets largest in 2008,

generating total volumes of 9.8 million units, equivalent to 58.1% of overall value.

7. Rising Demand for Hybrid Vehicles General Motors produces six hybrid models in

the US including the Saturn Vue and Aura Hybrids, Chevrolet Malibu and Tahoe

Hybrids, GMC Yukon Hybrid as well as a Cadillac Escalade Hybrid. The company is

also investing in hybrid and plug-in vehicles, for both cars and trucks. It is anticipated

that GM will produce up to nine hybrid models following the introduction of the

Chevrolet Silverado Hybrid and GMC Sierra Hybrid. International demand for light

hybrid electric vehicles (HEVs) is expected to increase. It is expected to rise to

800,000 units in 2009 and estimated to reach 4.5 million units in 2013. Therefore, a

positive outlook for light hybrid electric vehicles and plug-in vehicles market would

boost the demand for GMs products. (Times Reporter, 2013)

Threats

1. New emission standards A new wave for stricter regulations on vehicle emission

standards may negatively affect GMs finances. The corporate would have to invest

large amount of money to comply with these new standards.

2. Rising raw material prices Rising prices for raw metals will lift the costs for auto

manufacturers and result in squeezed profits for the companies.

3. Exchange rates China is GMs second largest market and the business earns huge

profits there. Exchange rate fluctuations threaten GMs profits if the dollar would

appreciate against Chinese Renminbi.

4. Weakness in Global Automobile Industry Consumer Requirements for commercial

vehicles declined in the NAFTA region, Western Europe and Japan. The Western

European automobile markets suffered as well particularly the volume markets of

Spain down 28.1%, Italy down 13.4% and the UK down 11.3%. Germany declined

1.8%) and France 0.7% also experienced downward trend in the second half of 2008.

In total, 8.4% fewer automobiles were sold in Western Europe. The Japanese car

market also declined, with a drop in sales of nearly 4% in 2008.


5. Intense competition GMs financial status makes it vulnerable to fierce competition

from fits such as AB Volvo, Bayerische Motoren Werke, Daimler, Fiat Group

Automobiles, Ford Motor, Honda Motor, Hyundai Motor, Isuzu Motors, Mazda

Motor, Nissan Motor, PACCAR, PSA Peugeot Citroen, Renault, Toyota Motor and

Volkswagen. Many have responded to the crises by adding vehicle enhancements,

providing subsidized financing or leasing programs in order to sell more vehicles.

They are also offering option package discounts, other marketing incentives and are

reducing vehicle prices in certain markets. These actions are expected to have a

negative effect on GMs vehicle pricing, market share and operating results

particularly on the low end of the market.

As General Motors lives another day with its strengths and opportunities in hand striving to

not be over powered by the threats and weaknesses. (Jurevicius, 2013)


Business Strategy of General Motors Company

In an interview, General Motors Chief Executive Office, Mary Barra, said There are no left

turns or right turns, after announcing a 22 percent drop in net profit. What we need to do is

accelerate.

There wont be a whole lot of that in 2014, as GM predicted only a modest improvement in

operating profit this year as it takes advantage of strong earnings in North America and China

to fund restructuring efforts elsewhere in the world.

Barra also shed some light on where shell be focusing most of her attention in the next few

years. The following points cover future opportunities.

1. Build up GMs brands: We have work to do, but were on it, she said,

acknowledging that brands like Chevrolet and Cadillac need to improve in the minds

of consumers. We all know thats a multi-year activity. GM has a strong lineup of

products in the pipeline, which will help, she said. Her goal: to make sure that GM is

profitable and wins in every segment of the market where it competes.

2. Grow in China: GM is already a leader in the worlds largest market, but Barra thinks

GM has plenty of untapped potential there. Cadillac has a huge opportunity in China,

and we think theres room in the market for Chevrolet to grow as well.

3. Reduce costs: Weve really got to focus on maintaining our cost structure, she said,

not just fixed costs but also materials and logistics costs. She says GMs many

operating divisions are already working together to bring down costs.

4. Be more global: Barra wants GM to seize more opportunities to leverage its global

strength in markets around the world. Thats one reason she wanted to create a new

presidents position for former CFO Dan Amman. We have opportunities across our

regions that we can seed more quickly, she said. With one executive overseeing all

of GMs international operations, she hopes to see more sharing of products and

expertise around the world. We have a great foundation. We just have to leverage it.

While 2014 will see only modest growth, GM is sticking with its mid-decade targets to

achieve 10 percent operating margin in North America, break even in Europe, achieve mid-

single digit profit in South America and improve in China.


Its going to be a multi-year journey that will involve brand-building, improvement in

material costs, and investment in new products. (Forbes, 2014)

While General Motors Chief Executive Officer stated various plans about strategizing

business as a whole, here are certain country specific markets that General Motors is aiming

to expand over a period of time.

China

General Motors President Dan Ammann and GM Executive Vice President and GM China

President Matt Tsien had earlier declared that the automakers investment and growth plans

in China.

Ammann stated that China had been GMs largest market since 2010 and in 2013 it

accounted for one-third of GMs global sales and hinting that China is expected to remain the

companys largest market well into the future. In addition, its joint ventures have performed

well as Chinas auto market has continued to expand, and that GM currently has an

aggressive strategy for capitalizing on the abundant opportunities now and beyond 2020.

To stay ahead of the industry growth, Tsien declared that GMs China joint ventures will

make capital expenditures of about $12 billion between 2014 and 2017. That investment will

help GM step up its pace by funding facility and capacity expansion and new product

programs.

Some of the $12 billion investment will fund the launch of more than 60 new and upgraded

vehicles coming to market through 2018. GMs focus will be on answering the growing

demand for luxury vehicles, SUVs, multi-purpose vehicles (MPVs) and smaller passenger

cars. In 2014 the company is launching the new Cadillac CTS midsize luxury sedan, two new

SUVs (the Chevrolet Trax and a new midsize entry from Buick), the Baojun 730 seven-seat

family vehicle and 610 hatchback, upgraded versions of the Buick Enclave and GL8 as well

as a next-generation Chevrolet Cruze.

Investments in GMs quality growth will include the opening of five new manufacturing

facilities by the end of 2015: four vehicle assembly plants and one powertrain plant. With

additional facility expansion between 2014 and 2020, GM Chinas manufacturing capacity

will increase by 65 percent.


GM is also continuing to expand its presence in the central and western regions of the

country. These areas already represent about 45 percent of GMs domestic sales. GM will add

dealerships and manufacturing facilities in these regions, including plants in Wuhan and

Chongqing by the end of 2015.

GMs Vision for 2020

As GM sees China a market full of growth and opportunity, GMs President and GMs China

Head stated some of the trends shaping Chinas auto industry in the next few years which

includes the following:

1. Luxury vehicles are expected to make up at least 10 percent of auto sales by 2020,

and GM will add one new Cadillac per year through 2016

2. The SUV market will reach 7 million by 2020, or triple what it is today. GM will add

11 new SUVs between now and 2018

3. MPV sales will likely double to 3 million by 2020, from about 1.4 million last year.

GM has demonstrated success in this area, with the Buick GL8 and Wuling

Hongguang series and more entries to come from its other brands

4. In 2020 compact sedans will still be the most popular segment, with about 10M

annual sales. GM offers the Buick Excelle family, Chevrolet Cruze and Baojun 630

and has more new models in the segment under development

5. Within six years, replacement or repeat purchases in China could exceed two-thirds of

industry demand, compared to one-third today. This trend is expected to drive demand

for more diverse offerings

One means for GM and its joint ventures to achieve their ambitious growth plans is by

creating new vehicle technologies locally. The Research and Development team at GMs

Advanced Technical Centers in Shanghai recently developed the worlds first casting

machine for lightweight magnesium parts, which are 30 percent lighter than aluminum parts

and can improve a vehicles fuel economy by as much as 7 percent for every 150-kilogram

reduction in weight.

GM will also continue to strengthen its focus on innovation through its Pan Asia Technical

Center (PATAC) joint venture, which will open a new facility in Shanghai next year, and the

GM China Advanced Technical Center in Shanghai.


GM will maintain its support of corporate social responsibility initiatives across China such

as the three-year GM Restoring Natures Habitat Project, which is helping protect key

wetlands in eastern China. GM is also supporting the Chevrolet Red Chalk Program to

educate children in rural areas.

The companys Safe Road Project, which is educating drivers and other road users on proper

road safety, will be expanded with the launch of a new project to help increase childrens

safety in and around cars. (General Motors Media, 2014)

In addition, General Motors, undeterred by slowing growth in China, announced plans to

plow $12 billion into the country by 2017 and boost capacity 65 percent by 2020.

GMs aggressive plans come as the growth in China auto sales cools to single digit rates after

years of double-digit expansion. The market for light vehicles grew 15 percent in 2013,

according to IHS Automotive. But growth will inch along below 10 percent in coming years,

slowing to 2.5 percent by 2020, IHS predicts.

Chinas No. 2 manufacturer by sales already has four new plants under construction that will

open by the end of 2015, boosting capacity to 5 million units from around 3 million units.

The product expansion entails the introduction of 60 new or refreshed vehicles in 2014

through 2018. GM will launch 11 new utility vehicles in China over the next five years. SUV

sales alone will account for 7 million units in China by 2020, more than triple the segments

current size, GM predicts. Luxury car sales are also expected to soar, accounting for 10

percent of the China market in 2020. China luxury sales will surpass U.S. demand in the next

couple of years.

Total domestic passenger vehicle capacity stands at 17.6 million in 2014 and should hit 21.7

million by 2018, predicts Yale Zhang, managing director of Automotive Foresight in

Shanghai. GMs plan to reach 5 million by the end of 2015 will likely give it the largest

vehicle manufacturing footprint in China, he said. (Auto News, 2014)

Russia

General Motors Company is reviewing the timing of the expansion of its Russian plant near

St. Petersburg because of a slump in the auto market.


The company opened the $300 million plant in 2008 and planned to launch the second stage

in 2015. The plant currently makes Chevrolet Cruze, Opel Astra, and Chevrolet Trailblazer

models.

GM was to reduce production at the plant to four days a month in August and September,

extending to eight in October.

Car sales have faltered in Russia this year as economic growth has slowed, causing people to

put off large purchases. Consumer sentiment has come under further pressure because of

Western sanctions over the crisis in Ukraine.

The downturn in Russia's car market gathered pace in July, with sales sliding 23 percent year-

on-year after a 17 percent fall in the previous month, according to the Association of

European Businesses (AEB). AEB data showed that sales of GM's Chevrolet cars fell 45

percent in July, year-on-year, while Opel sales tumbled 25 percent. (Reuters, 2014)

India

General Motors India has put in place an integrated export strategy, a first in its 18 years in

India, for Beat, its small car. It plans to kick-start export of Beat small car to Latin America

from the second half of 2014. The company will start the shipment with Chile in October an

approximately 2,000 to 2,500 units of Beat will be exported, before the company adds

Mexico, Peru, CAC (Central American and Caribbean countries in 2015).

Within a couple of years almost 18-20% of total production or 30,000 to 33,000 units at the

GM's Talegaon factory is expected to be used for the exports.

For the first year, the exports volumes will be small at about 2,000, and then the company

intends to export almost 30,000 to 33,000 units of Beat per annum to Latin America in the

next two to three years. Mexico will be its largest contributor at around 12,000 to 24,000

units going ahead.

General Motors follows a policy of 'build where we sell'. It is always exploring new business

opportunities.


This incremental volumes come at a time when GM is restructuring its international

operations, by segregating China from its Consolidated International Operations.

The decision was taken in November of 2013 to move the Consolidated International

Operation Office to Singapore to have a closer watch on markets like India and South East

Asia.

The export plan to Latin America for Beat may have been driven by this global restructuring,

say people close to the company.

Experts say, the export volumes comes as a big relief to GM India, as the capacity utilisation

level in FY14 was at around 35-40% at 80,000 units with both the plants (Halol, Gujarat and

Talegaon, Maharashtra) having a combined capacity of 2,50,000 units. (The Economic

Times, 2014)

General Motors India is expecting good growth in sales in the north eastern region during the

2014-2015 financial year amid falling sales across the country.

North-East continues to be a very important market for General Motors India. The region is a

significant contributor to GM India's overall sales. GM is expecting good growth in the north

eastern region in 2014-2015.

The performance of North-East will be in the backdrop of continuing sluggishness and

volatility in Indian automobile market and so the company expects to perform in tandem with

the industry. The North-East contributed about 33 per cent of the total sales in the eastern

region, which accounted for 13 per cent of overall India sales.

GM also states that Assam continues to be a strong market and contributes the highest in

terms of sales with around 68 per cent of total North-East sales.

In 2013, GM India sold 86,829 units in the domestic market as compared to 92,435 vehicles

in the previous year. The company reported 36.58 per cent decline in August sales this year at

4,232 units as against 6,673 units sold in the same month last year.

On the performance of different models, the petrol variants of Chevrolet Beat as well as SAIL

hatchback and sedan options continue to be the favourites of customers in North-East.


Talking about the company's sales strategy, GM continues to tap the market in this region

with innovative marketing schemes, customer camps, roadshows and various other customer-

centric initiatives.

GM India is currently present in North-East through 14 showrooms and as many service

centres. GM also plans to expand the network in tandem with the market growth.

GM India has two vehicle manufacturing plants in Gujarat and Maharashtra, besides a

technical centre in Bangalore and the company has invested over a billion dollars to cater to

the requirements of the Indian market. (The Economic Times, 2014)


Challenges faced by the new General Motors Company

As they are calling it the new General Motors under its first lady Chief Executive Officer,

Mary Barra, who is not only trying to fix problems left by her successors but also is facing its

consequences. General Motors, in April, revealed it is the subject of five different

government probes related to its massive recalls, including two previously unreported

investigations by the U.S. Securities and Exchange Commission and a state prosecutor.

GM disclosed the probes in a regulatory filing that first-quarter profit tumbled 88 percent due

to the recall. The five government investigations are from the U.S. Attorney's Office for the

Southern District of New York, the SEC, the National Highway Traffic Safety

Administration (NHTSA), a state attorney general, and Congress.

The company is also stuck with fifty five class action lawsuits pending in U.S. courts, as well

as five in Canada.

The onslaught of investigations and lawsuits against GM started in February, 2014, when the

company launched a massive recall of vehicles with potentially defective ignition switches

that have been linked to at least 13 deaths.

In its regulatory filing, GM said it was cooperating with all the investigations, and that the

company could face damages, fines, or civil and criminal penalties.

GM also mention in the filing that it is currently unable to estimate a range of reasonably

possible loss for the lawsuits and investigations because these matters involve significant

uncertainties at these early stages.

Although the company cannot estimate a reasonable range of loss based on currently

available information, the resolution of these matters could have a material adverse effect on

its financial position, results of operations or cash flows.

Federal prosecutors are focusing on whether GM is criminally liable for failing to properly

disclose the problems with the ignition switches, which first came to light about 10 years ago.

The NHTSA's probe similarly is examining whether or not the company reacted swiftly

enough to recall the cars.


In addition, some of the shareholder lawsuits against the company address matters that would

likely be of interest to federal securities regulators.

Some of the lawsuits accuse GM of making material misstatements and omissions in their

financial statements related to the ignition switch problems. (Lynch, 2014)

As GM struggles with pending lawsuits and there is more for the company to take care of. A

problem with parking brakes in 221,000 Cadillac cars has caused the company to recall them.

The flaw can cause brakes to overheat. That, in turn, might cause a fire. So far, no one has

been injured due to the flaw, but GM has one more recall, and Cadillac has one more hurdle

to its struggle to catch luxury car brand leaders.

Nearly everyone in the country knows that GM has recalled more cars than it makes in a year,

so far in 2014. The count has moved above 26 million. Some of the recalls will cost GM as

much as hundreds of millions of dollars in liability suit claims and repairs. The Cadillac recall

does not rise to the level of those challenges, but it will be one more bullet to the way the car

buying public views GM.

More specially, Cadillac is in the midst of a major push to catch Toyota Motor Corp.s Lexus

brand, Audi, BMW and Mercedes at the top of the luxury car ladder. The four have

tenaciously held their lead most years since Lexus was introduced in 1989. Among many

drivers, Cadillac is still considered a car for older buyers. A recent study reported that

Cadillac buyers were among the oldest buyers of all luxury cars.

Whatever the cause, Cadillac sales have stumbled, despite the introduction of new models

like the ATS. In August, Cadillac sales fell 18% compared to the same month a year ago.

Year to date, sales were down 5%. Except for sales of its Escalade SUV, sales of all its other

models dropped in August.

Cadillac hopes it can restart sales with new models. It will launch a top of the line model

soon. However, the top four luxury manufacturers release new and upgraded models every

year, which likely negates any advantage new Cadillacs will have.

GM recently named Johan de Nysschen as head of Cadillac. He was the head of Nissans

troubled Infiniti Luxury division where the company hopes that this odd choice will make a

difference in the brand.


Recalls may seem benign when no one has been injured. However, Cadillac cannot suffer

new blows to its image, no matter how modest they are. (McIntyre, 2014)

As GM is innovating with its products simultaneously to its other problems, this tech

innovation is not leaving the company to grow in its space either. The Company is in the

process of taking automotive technology to the next level and isnt giving itself a lot of time

to do it.

The automaker is to have cars that can talk to each other and almost drive themselves at

freeway speeds in just two years.

The semi-autonomous system for freeways will be an option on an unidentified new 2017

Cadillac that goes on sale in the summer of 2016. In addition, another 2017 Cadillac, the

CTS, will be equipped with radio transmitters and receivers that will let it communicate with

other cars, sharing data such as location, speed and whether the driver is applying the brakes.

GM Product Development Chief Mark Reuss had stated in an interview that the automaker

looked for help in all kinds of places. We went to the Navy, we went to the nuclear part of

the Navy, he said.

With this, when the question about hackers was raised, this is what he had to say, As we put

semi-autonomous and autonomous systems into vehicles, we have to be able to look at this as

a very, very critical systems level and do it defect-free for the customer. Auto analyst David

Cole said GM is entering a whole new level of technical sophistication. Theres a risk when

youre communicating with the outside world. Its a huge issue for the military. Its a huge

issue in all aspects of our society today, Cole said. The one thing you have to do inside the

auto industry is make the technology as bullet-proof as possible.

GM has hired a new cyber security officer to tackle the potential problem. Its a far cry from

the companys ignition switch troubles, yet the hire was made with that disaster in mind. It

cant happen again and theres no room for error. (Click on Detroit, 2014)


Corporate Restructuring Plans of General Motors Company

GM is currently working to continue to make sure products are at the core so that it is

segment-leading for every market it competes in. GM is of the belief that it has great products

from the legacy which need some work to perform better. In view of this idea, GM explains

that Cadillac has a strong showroom but it lacks that above average line of luxury. Hence, it

is working on that in the United States and will soon grab an opportunity to expand further in

China and then move globally.

GM upholds a culture where they are focused on doing great cars, trucks and crossovers. The

measure of that is the cars that it is putting on the road. GM further believes in holding back

its people who have lived and experienced ups and downs of the company. They say its

about giving those individuals the right tools and the ability and the power to do great

vehicles. The company is looking at ways to improve efficiency, putting right processes in

place through Six Sigma Training. (Forbes, 2014)

With all problems that Mary Barra is facing, she is also planning for a better future of

General Motors Company. She oversees a company with 219,000 employees worldwide and

$155 billion in revenue in 2013 that slipped from its spot as the worlds second-largest

automaker by sales to No. 3, behind Volkswagen. Toyota Motor Corp. was No. 1. VWs

gains were helped by growth in China where the Wolfsburg, Germany-based company

unseated GM as the top-selling foreign automaker for the first time in nine years.

GM delivered a 2014 forecast that predicted only modest growth in the current year, noting

that improved performance in the U.S. and China would offset the costs overseas. GM is

restructuring operations in Australia and South Korea while facing currency challenges

in Russia and South America. (Higgins, 2014)

As the automaker is resolving its issues, it is also eyeing at the development that can drive the

company out of hot water. General Motors has recently announced a strategic realignment

that places Cadillac as a more autonomous branch of the automaker. Cadillac will become its

own business unit, yet still ultimately report back to GM. Adding to the autonomy, Cadillac is

moving its global headquarters from Detroit to New York City, with the facilities set to open

in 2015.


The president of Cadillac brand, Johan de Nysschen disclosed this in recent news. In

addition, GM President Dan Ammann stated that with Cadillacs upward repositioning, the

next logical step is to provide Cadillac more freedom to cultivate the brand in pursuit of

further global growth. Also, Cadillacs mission is to reinstate the brand to a preeminent

position among global luxury brands, a bold challenge requiring a distinct and focused new

organization.

Cadillacs new headquarters will be located in the Soho area of Manhattan with offices and

event spaces. Set to open sometime in 2015, Nysschen and GM still have to determine what

personnel will make the move, and which will stay with Cadillacs technical operations in

Detroit. (McNabb, 2014)

As the company tries to ride out of the trouble in its home country, some relief is expected

from overseas. Though Chinese demand for the companys core Chevrolet and Buick

business is cooling as consumers move toward competing Ford Motor Co. and Volkswagen

AG brands; GM is riding on the success of the Chevrolet Cruze and the recently

introduced Cadillac brand in China, it expects to deliver more than the 3.16 million cars it

sold in the worlds largest auto market last year through its local joint ventures. This means

GM won't regain its position as Chinas largest foreign automaker that it lost to Volkswagen

in 2013, ending its nine-year reign.

The head of GMs China operations, Matt Tsien, stated as per The Wall Street Journals

report that the second-generation midsize Cruze is key to achieving the company's sales goals

in China. The automaker is definitely in need of the Cruze to be successful.

GM, which is facing a costly recall fiasco in the U.S., is counting on China sales to help

offset some of those problems. The Detroit automaker is also facing increasing competition

from crosstown rival Ford and the enduring challenge from Germany's Volkswagen, the

carmaker with the longest history in China. Luxury cars produced by Volkswagen's Audi

division are popular among affluent Chinese.

GM is hoping its decades-old luxury Cadillac brand, first introduced in China in 2013, will

help North Americas biggest car company gain market share in the important luxury

segment.


Cadillac sales, which have been flagging in the U.S., are expected to be up this year by 40

percent, to 70,000 cars. GM expects China could surpass the U.S. to become the biggest

luxury car market in 2016.

GM has several joint ventures in China, which require foreign automakers to form

partnerships with domestic companies as part of the countrys efforts to improve its domestic

auto manufacturing through these cooperative agreements. Foreign automakers, in turn, gain

access to the burgeoning domestic car market, where consumers prefer foreign brands if they

can afford them.

GM makes Buicks, Cadillacs and Chevrolets through Shanghai GM, a joint venture between

the U.S. automaker and Shangahi-based SAIC Motor Corporation, Chinas biggest

automaker. SAIC General Motors Wuling Automobile produces Wuling and Baojun

branded commercial and passenger vehicles, while FAW GM makes commercial pickups,

vans and heavy-duty trucks. (Young, 2014)


Conclusion

General Motors continues to change its business as it looks to entice companies and

consumers with its new and improved vehicles. The companys Chief Executive Officer

Mary Barra had stated in one of her interviews that she fired 15 people as soon as she took

charge of the company. It was done on the grounds of eliminating resources which are no

longer helping the company to grow. The stock has struggled to make positive progress in the

past several years, but is currently surging higher. Over the last four quarters, earnings have

been decreasing while revenues have been increasing, which has produced mixed feelings

among investors. Relative to its peers and sector, General Motors has been a poor year-to-

date performer.

As the company is struggling to cover for its recalls in the U.S. it also has plans to grow and

bring more innovative and customer friendly products in the market. With the automakers

first lady Chief Executive Officer, taking the reins in her hands and aiming to march the

company forward, the world awaits to see what this multi-national automaker giant is capable

of doing.


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Paritosh Agarwal - SM