Gm manendra

Why GM ???????????

Presented by-:

Manendra Shukla

Year of Establishment 1908

Year of Christening as GM Corporation 1916

Name of the Founder William

Durant

Company Headquarter Detroit, Michigan,

United States

Operation In 33 countries

No. of Employees 3,27,000

CFO & Executive VC : Ray G. Young

CEO : Fritz Henderson.

Chairman : Ed Whitacre

Vice Chairman : Robert A. Lutz.

Present Owners United States Treasury 61 %

United Auto Workers VEBA 17.5 %

Canadian & Ontarian Governments 11.7 %

Bondholders of Former GM 9.8 %

(now called as Motors Liquidation Company)

• “Best Car Manufacturer” by Middle East in 2008.

• “Corporate Hispanic Advocate of the Year” Award in 2006.

• “ 2005 Corporate Champion of the Year” Award..

• Won “Green Award” for launching Solar Car.

• “Diversity Awards” Given to GM

• “Excellence in Marketing” – Special award (2005)

AWARDS & ACHIEVEMENTS

Journey of General Motors to Government Motors

1900 :- Motor Companies were in dire straits during this period.

1907 :- Stock Market panic in this year put a lot of companies in financial distress.

1908 :- The various companies folded into a single unit, creating GENERAL MOTORS.

1908 :- Founded on September 16, in Flint, Michigan as holding company for Buick, controlled by WILLIAM C. DURANT. Acquired Oldsmobile later that year.

1909 :- Acquired many companies & folded into a single unit , called General Motors Corporation.

1910 :- William Durant was removed from the company & bankers prevented financial collapse.

1911 :- Company advanced to International Market.

General Motors Export Company was formed to handle sales outside U.S. & Canada.

1915 :- Durant formed Chevrolet, to come back into GM.

1915-1920 :- The period was full of success . Cadillac became wildly successful. Durant reorganized General Motors Company into General Motors Corporation.

1918 :- GM bought the operating assets of Chevrolet Motors.

1920 :- Durant again found himself out of the company,

after the new vehicle market collapsed.

1920 :- Thereafter Alfred Sloan took charge of the corporation, thus, giving a fresh lease of life into GM and led to its post war global dominance.

During the financial boom in the 1920's, the history of GM virtually glowed with success. Auto sales reached the 4.5 million mark, and the auto industry now had three giants -GM, Ford and Chrysler.

1929 :- The Great Wall Street crash put an abrupt stop to all expansion plans at GM. Stock Price fell badly.

1930 :- GM bounced back and bought the Yellow Coach bus company.

1930 :- It also bought Electro- Motive Corporation, the internal combustion engine railcar builder.

1955 :- 31st December, 1955, is another landmark in the history of GM. The first company to make more than a billion dollars in a year.

1929 :- The Great Wall Street crash put an abrupt stop to all expansion plans at GM. Stock Price fell badly.

1930 :- GM bounced back and bought the Yellow Coach bus company.

1930 :- It also bought Electro- Motive Corporation, the internal combustion engine railcar builder.

1955 :- 31st December, 1955, is another landmark in the history of GM. The first company to make more than a billion dollars in a year.

1931-2005 :-

• Led in Global Sales for 75 consecutive years.

• Manufactured cars and trucks in 34 countries.

• Employed 2,44,500 people around the world.

• Sold & served vehicles in some 140 countries.

STRATEGIES THAT LED TO GROWTH

Positioning itself in emerging markets so that the company will grow simultaneously with these economies.

Manufacturing of small cars for Brazil as well as other countries including Argentina and Paraguay.

Expand the product development center.

Taking on the responsibility of developing GM’s small cars in support of its GM Daewoo operations in Korea.

• Hiring & Developing the best talent.

• Expanding its product base to mid-size trucks.

• Investing in Emerging Markets.

• Providing right product to the right person.

• Huge investment in promotional activities.

• Continuing to expand global client base.

• Emphasis on “Continuous Safety: Protection Before, During, and After a Crash.”

Adopting to a different international marketing strategy.

• Focusing on a large number of brands.

• Segmenting the market on the basis of cars:-

Chevrolet- Entry level car buyers.

Opel & Vauxhall- Middle market consumers.

Cadillac- Wealthy people.

Hummer- Premium market consumers.

• Provided Power Steering, Power Brakes, Independent Suspension, & Automatic Transmission.

• First Auto company to change its car features & styling almost annually.

• Brand Differentiation that offered “A car for every purse & purpose”.

CORPORATE SOCIAL RESPONSIBILITY

•K-12 Education Initiatives.

• Environment.

• Community Involvement.

• Partnership with Ethanol companies to reduce dependency on petroleum or any other fuels.

• Manufacturing Hybrid Vehicles, mostly solar powered.

DOWNFALL

2005 :-

• GM booked a $4 billion loss.

• 30,000 employees were laid off.

• 12 plants were closed down.

2008 :- In late 2008, GM received loans from the America, Canadian, and Ontarian governments to bridge the late-2000s recession, record oil prices, and a severe global automotive sales decline due to the global financial crisis of 2008–2009.

2009 :- On April 27th GM announced to phase out the Pontiac brand by the end of 2010. Rather it focused on only four major brands- Chevrolet, Cadillac, Buick, and GMC.

2009 :- On 1st June, 2009, General Motors’ applied on

for Chapter 11 protection from its creditors, triggering

the biggest industrial bankruptcy in history, was

nonetheless a momentous event.

Announced plans to reduce U.S. Workforce by 20,000

employees.

NGMCO Inc. purchased the ongoing operations from

GM.

Announced new Board of Directors

Fritz Henderson, new CEO.

Reasons for downfall Not filing for Bankruptcy sooner.

Huge legacy expenses such as high cost of pensions and health care .

Over reliance on gas guzzlers , Mediocre product quality & Unimpressive design .

Revolution of Shareholders/ Institutional Investors for high payout.

Driving incentives into the ground .

Selling control of GMAC.

Timid & Poor management.

Less attention to R&D and innovation.

Reasons for downfall Killing the EV1 electric program.

Ignoring Jerry York.

Mishandling Fiat .

There were no. of litigation & lawsuit against GM during2003-08 . Such as – Green House Gas Lawsuit.

Emphasis on manufacturing big cars and SUVs .

Carrying of non-profit contributors.

GM’s top selling Chevorlet division to launch SUVs this year ,where the rivals launch it 4 yrs back.

GM Bankruptcy send the rallying market into reverse.

GM will layoff thousands of employee to reduce cost.

Slashing the number of dealership.

Competition will be stronger for GM due to downsizing .

Many dealers lost their confidence and have taken non-GM franchises.

Impact of GM’s Bankruptcy

GM’S bankruptcy could impact Indian service providers in a small but significant way, immediate impact being delayed payment and ramped down existing project. There will be adverse impact on US steelmaker.

The GM fiasco will boost up the confidence of Asian Auto maker to increase their market share.

GM customers may suffer severe cutbacks in service and availability of partsThe used GM car market — already burned — will be toast.

Continue…..

0

5

10

15

20

25

GM TOYOTA FORD CHRYSLER HONDA NISSAN

23.5

15.915.2

12.6

9.4

6.5

22.1

16.5

14.7

10.8 10.6

7

2007 (%)

2008(%)

Principal Competitors of GM & market share in US.

Note : Above data related to passenger car & trucks.

Comparison of Industry v/s GM sales

Old GM New GM

Buick, Cadillac, Chevrolet,

Daewoo

GMC, Holden, Hummer, O

pel,

Saab, Saturn, Vauxhall

BrandsBuick, Cadillac, Chevrolet

Daewoo, GMC, Holden

5,900 Dealerships 3,600

Common

shareholders, bondholders,

and secured creditors

Ownership

The and Canadian

governments,

and UAW union

47 Plants 34

$176 billion Debt $48 billion

91,000 employees 68,500

Comparison of the new and the old General Motors

Survival strategies for GM Revise GM’s sales projection.

Make more fuel efficient cars that burns less gasoline.

Trim models from 48 to 36.

Launch new models in market which are customer friendly . such as “Chevorlet Cruze”

Invest in passenger cars.

Ditch half of its brands.

Hire special Experts.

Survival strategies for GM Development of alternative fuel vehicle.

Development of Hybrid or Eco-friendly car.

Reduce compensation and headcount.

Reduce the no. of Retail Channel and Dealer network.

Sale some of businesses

Give more responsibility to Managers.

Reduction in meeting hours.

Overview of Financial Aspect

Revenue : (US$ 148.979 billion) (2008)

Operating Income : (US$ 21.284 billion) (2008)

Net Income : (US$ 30.9 billion) (2008)

Total Assets : US$ 91.047 billion (2008)

Total Equity : US$ 86.154 billion (2008)

FINANCIAL HIGHLIGHTS (Figures in $ mn).

31st December 31st December

2008 2007

Total Current Assets 41,224 60,135

Total Insurance & Financing

Operations Assets 4,507 16,989

Total Fixed Assets 39,656 43,017

Non – Current Assets 5,660 28,742

Total Assets 91,047 1,48,883

31st December 31st December

2008 2007

Total Current Liabilities 73,911 69,510

Total Financing & Insurance

Operations Liabilities 1,822 5,813

Long – term Liabilities 29,594 33,384

Non Current Liabilities 71,060 75,656

Total Liabilities 1,76,387 1,84,363

Less :- Accumulated Deficit 85,340 35,480

Total Liabilities 91,047 1,48,883

. Figures in $ mn.

31st December 31st December 31st December

2008 2007 2006

Net Sales & Revenue 1,48,979 1,79,984 2,04,467

Costs & Expenses 1,70,263 1,84,293 2,10,290

Operating Loss ( 21,284 ) ( 4,309 ) ( 5,823 )

Net Loss ( 30,860 ) ( 38,732 ) ( 1,978 )

EPS ( 53.32 ) ( 68.45 ) ( 3.50 )

Profit & Loss A/c Figures in $ mn.

Quarterly Result (Figures in $mn)

As on As on As on

31st Mar,09 31st Dec,08 30th Sept,08

Total Revenue 22,431 30,778 1,18,201

Gross Profit (2,180) (2,516) 892

Total Operating Expenses 2,576 4,820 14,840

Operating Income (4,756) (7,336) (13,948)

Non-Operating Expenses 1,305 1,455 6,649

EBIT (6,061) (8,791) (20,597)

EAT (5,947) (9,528) (21,626)

STRENGTH

Company size & Market Share

Technological Potential

New Leadership

Quality Improvement

Acceptance of Improvised Model

Structural Approach & Relationship

WEAKNESS

Failure to implement technolog

Bureaucratic Culture

Product Design Problem

Negative Effect of Downsizing

High Cost of Production

Relationship with UAW

Expansion of their global presence

Continue to build on the newfound

customer confidence

Changing consumer demand for new

model types & styles

Introducing CHEVY VOLT.

Planning to launch $4000 car.

Trimming the number of factories and shedding

out jobs as well.

Focusing only on a few brands.

Wiping out common shareholder.

US-owned GM plans to float IPO by July 2010

“ The Road is tough, but the ultimate goal – a leaner , stronger , viable GM – is one we share.”

-Fritz Henderson ( CEO )

General Motors.

LESSONS LEARNT

•Great works are performed not by

strength but by perseverance

•The only constant in this world is

change, so we need to be flexible

•A company should focus on its core

activities

•A right decision at a wrong time ultimately

becomes a wrong decision

Good deeds always pays off.

When the cash cows turn into dogs , its better

to sell the cow and earn money out of it.

We should be more realistic rather than being

over ambitious.

Quality must never be compromised for the

sake of crown

References:

www.gm.com

Wikipedia.com

Business Today .

Economic Times

Business Standard.

www.googlefinance.com

Thank You