University of Chicago
Type of paper: Thesis/Dissertation Chapter
General Motors strategy and objectives
GM is considered one of the world’s most treasured automotive companies over time and has attracted most loyalty from the esteemed customers in the automobile industry. To the suppliers and dealers, the GM has been the preferred business partner. To investors, GM means a blue chip holding by virtue of a long-term lucrative growth.
GM led the global automobile sales for the past 77years successive years from 1931 through 2007, which is longer than any other manufacturer; it’s currently among the world’s largest vehicle manufacturer.
General Motors strategy and objectives
The GM Company operates to produce the highest quality automobiles in the market worldwide and in its recent strategies it has emerged among the best in terms of embracing new technology, business diversification. Out of the total number of automobile it produced in the year 2012, 72% of them were purchased. This is a positive indication of the influence and loyalty the firm has attained in the market. The sector of automotive is experiencing a lengthy period of declined profitability and sales. To ensure future growth, GM has proposed three strategies; Retrenchment strategy focuses on product redevelopment, more specifically brand reinvention. The next approach to GM’s redevelopment is a growth strategy, which has the option of expanding GM into emerging countries. The last strategy, is a restructuring strategy which explains a way to raise profits in the long term by revising the current pension plans and health care. The main strategy focuses on the retrenchment strategy it provides the greatest amount of near-term and sustainable profitability. How should GM use its scarce financial and human resources to stop its slide? GM needs to become more competitive and turn around its financial performance and ensure long-term profitability.
For the past four years, GM has successfully been formulating and implementing effective strategies to enhance growth and profits in its worldwide market and some of these strategies include, investing almost $11 billion of its capital of 35 U.S.in expanding its facilities and since 2009 it has done so to ensure, more efficient productivity and to form higher quality vehicles. The joint projects in China, which have been constructing new factories that are anticipated to improvement the company’s production capacity by about 30 % to more than usual 5 million units annually by the coming year of 2015.
So far in Europe, Opel that is one of GM’s affiliates is undertaking among the largest product belligerent in its history and is introducing 23 new vehicles and ten new engines due 2016
In addition, the South America’s GM affiliate energized its Chevrolet product inventory with a full assortment of refined, fuel-efficient and technologically advanced automobiles. In its process of relocating the GM headquarter to achieve a consolidated international operations to other parts like Singapore, which will help in sharpen the companies of south Asia region,
Balance scorecard is used to measure the performance of the financial and non-financial situation in General Motors Company. The score card entails financial perspective, customer perspective, internal perspective, and growth perspective. It enables General Motors to develop a comprehensive view of their operations and to better all operating and investment activities to long and short-term strategic objectives (Mural, 2008). Balance scorecard improves employee satisfaction and increases employees motivation, in general ensures human capital development.
High-performance work system
Open systems, autonomous work teams and performance-based pay are known as high-performance work system (Rouse, 2000). The system is known as a high involvement work system, high commitment, and flexible work systems. In GM there are only three factors that affect the high-performance work system; technology, retrenchment of employees and layout design. Retrenchment will cause GM lose employees who are much talented and subsequently lose a competitive edge. To surviving in a competitive environment, the company must rely on their workers creativity, strong teamwork, and problem-solving ability. The use of technology is a feature in the high-performance work system, all managers in every department of GM must be able to identify the technology they use in their firm. The information System can store data on employees that can help managers in deciding which employee is performing or not. Layout of GM offices and production plants is required to design to increase employee’s productivity.
The job designing would be performed well by the human resource manager. GM should come up with the proposals to transform the existing layout to an improved sustainability working layout.
The company has adopted a Customer-Driven Sustainability strategy over the past few years. Its priorities have largely concentrated on building the foundation of the global sustainability practice, which aims at achieving the following,
• Creation of operational and product guarantees
• Identification of impact effective areas
• Enlargement of sustainability reporting practices and publication of the report
• Formation and alignment of corporate strategies and positions
• Development of processes for consistent global effecting,
Most part of the foundational efforts is already completed, and the company anticipates spending the next several years of the building industry leadership in those areas of sustainability where we can make the greatest impact.
Innovations that grow business by presenting new products and services that clients long for, while helping GM in responding to big trends and solving environmental issues and social disquiets.Integration that enhances sustainability is adopted embraced at all levels in GM at the global, regional and local stages across all strategic utilities and are vital in all the company’s undertakings.
Transparency that is vital in building trust and accountability via the development of commitments to measure as well as manage progress through regular disclosure and reporting.
Engagement with employees is encouraged in order creating a sustainable mindset in the whole company and with the external stakeholders to look for opinions on issues of concern and input for further improvements.
GM has decided to reduce its product portfolios and direct the focus on Chevrolet, Cadillac as its “full-line marquis. The move is a drastic moving from their previous marketing strategy which includes offering an assortment of vehicles for every brand. This marketing strategy is formulated in order to prevent the opportunity for overlapping products. Instead of producing too many average vehicles, General Motors will be able to focus on great vehicles that will make the brand stand out. The Detroit News stated that all three brands GMC, Buick, and Pontiac will be offered under a single dealership. This change was made to increase productivity and branding within each dealership.
The following is a representation of the data that was adopted from the New York Stock Exchange and Toronto Stock Exchange. The Quarterly price variations based on the high and low prices from day to day trades of the GM common stock on the New York Stock Exchange, the principal market through which the stock is traded, are as follows (GM Annual report.
Years Ended December 31, 2012 2011 2012 2011
High Low High Low
Quarter HIGH LOW HIGH LOW1st . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $27.08 $20.75 $39.18 $30.00
2nd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $27.0030 $19.24 $30.47 $28.17
3rd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $25.01$18.72 $32.08 $19.77
4th. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28.88 $57.67 $26.55 $17.10
GM Company and its subsidiaries
Successor Predecessor Years Ended December 31,
July 10, 2009 Through December 31, 2009
January 1, 2009
July 9, 2009 Year Ended December 31,
2012 2011 2010 2008
Income Statement Data:
Total net sales and revenue (a) . . . . . . . . . . . . . . . . . . . . . . . . $152,254 $150,277 $135,591 $ 59,474 $ 47,115 $148,979Reorganization gains, net (b) . . . . . $128,155 $ Income (loss) from continuing operations . . . . . . . . . . . . . . $ 6,134 $ 9,286 $ 6,502 $ (3,786) $109,003 $ (31,051)
Net (income) loss attributable to non-controlling interests . . . 52 (97) (331) 511) 115 108
Net income (loss) attributable to stockholders (c) . . . . . . . . . $ 6,88$ 9,190$ 6,12 $ (4,297) $08,106 $(30,719)
Net income (loss) from common stockholders . . . . $ 4,86 $ 7,585$ 4,608 $ (4,428) $109,118 $ (30,941)
GM $0.01 par value common stock and Old GM $1-2/3 par
Value common stock
Basic earnings (loss) per share:
(d)Net income (loss) from common
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.11 $ 4.95 $ 3.12 $ (3.58) $ 178.63 $ (53.47)
Diluted earnings (loss) per share:
(d)Net income (loss) attributable to common
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.91 $ 4.59 $ 2.88 $ (3.58) $ 178.55 $ (53.47)
Strengths; it has manufacturing distribution, assembly offices and also warehouses operations in 55 countries.GM is well rooted not only in U.S but also throughout the world. GM shares are still aggressive in China experiences will make them come back in the competition. However, variety of different brands help them to reach all target markets.
Weaknesses: GM has a debt with the government. Poor organizational structure since there is a lack of communication between employees from the top to bottom, profitability is decreasing. Downsizing thousands of people.Opportunities: GM can use its competitors ideas to get back, they still have loyal customers. Increasing demand for hybrid/electric vehicles, GM still have Opportunities in emerging markets. Changing clients demand new model types.
Threats: The gas prices are increasing rapidly; competition is developing new car styles and efficient. The rising raw materials prices and environmental emission standards. The crisis is a threat in the USA, Europe, and Asia.
GM addresses health and vitality of the global communities through financial contributions like donations and volunteer initiative. GM invests in projects that improves health, education, and safety and also address the needs for technology and innovation. Their actions are guided by values; they are the drivers of their decisions, essence of their code of conduct. At GM social responsibility starts with their core values particularly the values of integrity, individual responsibility, and respect. All their corporate activities are measured against these values. They put their values into practice through their Winning with Integrity guideline employee conduct. This summarizes their important legal obligations and policies in the conduct of the business. In summary, GM is working on building solutions to the challenges of the community involvement every day because they need to be a trusted company.
The determined relevant market value at the date of the overall financial statements applies to the complete year, in spite of the appropriate market value calculated during the previous quarters of the current year. Using the two-class technique to analyze basic earnings per a single share and the increased dilutive of the two-class or converting method to calculate diluted earnings per share in the previous due December 31 of 2012 and 2011. The two-class method for computing EPS, as well as undistributed earnings are oftenly allocated to common stock and the Series B Ideal Stock according to its respective contribution rights in the undistributed revenues, as if all the earnings for the time had been exhaustively been distributed.(Form 10-K Annual Report, P36-41).
Unpredictability may result in calculating of earnings per share from time to time subject to whether the application of the two-class technique is essential. The application of the two-class technique occasioned to an allocation of undistributed incomes to the Series B as Preferred Stockholders and, consequently, 152 million common stock equivalent from the already conversion of the Series B Preferred Stock are usually not considered outstanding for purposes of determining the weighted-average mutual shares outstanding in the computation of diluted paychecks per share in the years (GM press release, January 2012) .December 31, 2012to the year ended2011.The MLC circulated approximately 272 million permits for its common stock for its unsecured creditors including the GUC Trust. The warrant holders can use their covers at any time proceeding to their respective expiration dates (GM press release, January 2012).
Upon exercising of these warrants, the shares allotted will be encompassed in the number of basic dividends remaining that are used in the calculation of earnings per share.
The securities and license necessary to buy 313 million shares of the common stock were unsettled at December 31, 2012 and 2011, and in which46 million shares were exempted in every year’s calculation of diluted incomes per share because the warrants’ exercise price was more than the prevailing market average worth of the common shares(GM press release, January 2012). Under the capital stock method, the presumed undertaking of the unsettled permits resulted in over 104 million and 130 million dilutive shares in the two consecutive years ended on December 31, 2012 and 2011.Diluted earnings per share comprised of the consequence of 15 million and 13 million investment in RSUs arranged to certain global executives in the years ended December 31, 2012 and 2011.In July 2011, the 61 million dividends of common stock funded the pension plans of January 2011 met the criteria to be eligible as plan resources for bookkeeping resolutions. The shares were considered unresolved for incomes per share purposes opening in July2011 (GM press release, January 2012).
The totals in the year concluded on December 31, 2012 include dwindling charges relating to the investment in PSA of about $220 million, Income linked to numerous insurance retrievals of $169 million, a fee of $119 million in connection with the entry into the contract to sell the GMS business, which later led in a drop in the carrying value to proposed fair value, and appreciation of deferred returns from technology contracts with SGMW of $115 million(GM press release, January 2012).
He total figures concluded in the year ended December 31, 2011included impairment charges associated to the investment of Ally Financial of $555 million, which is reflected as a gain on the sale of Ally Financial favored shares of $339 million, and appreciation of deferred revenue from technology contracts with SGMW of $113 million. On the other hand, the amounts in the year ended December 31, 2010 include the gains from the reversal of an accumulation for contingently issuable shares of GM Company common stock to the MLC of $162 million, which was a gain accrued after the sale of Saab valued $123 million, this resulted in an improvement on the acquisition of GMS of $66 million and an increase on the sale of Nexteer of $60 million (GM Annual Report, p51-58).
“GM Delivered 9.7 Million Vehicles Globally in 2013” (Press release). General Motors. Accessed 11th December 2014
“Form 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year Ended December 31, 2012 Commission File Number 001-34960. Accessed 11th December 2014
General Motors Company” (PDF). General Motors. February 15, 2013. Archived from the original on August 6, 2013. Accessed 11th December 2014
“About GM: GM Corporate Officers”. Media.gm.com. June 19, 2012. Accessed 11th December 2014
GM Press Release (January 20, 2012). “GM global sales up 7.6% in 2011 to 9.026M vehicles; China and US largest markets”. Green Car Congress. Accessed 11th December 2014