Key Strategic Issues Of General Motors - Research Paper Example

Key Strategic Issues Of General Motors Table of Contents 1.0 INTRODUCTION 3 2.0 EXTERNAL ANALYSIS 4 2.1 PESTLE 4 2.1.1Political 4 2.1.2Economic 5 2.1.3Social Factors 5 2.1.4Legal 6 2.1.5Technological 6 2.1.6Ecological 7 2.2 Porter Five Forces 7 2.2.1 Threats of Substitutes 7 2.2.2Bargaining Power of buyers 7 2.2.3Bargaining Power of Suppliers 8 2.2.4Rivalry between existing competitors 8 2.2.5Threat of new competitors 8 2.3 Market Segmentation 8 3.0 INTERNAL ANALYSIS 10 3.1Strategic Capabilities 10 3.2Core Competencies 10 3.3Value Chain 11 3.4Financial Analysis 11 4.0 SWOT ANALYSIS 12 4.1 Strengths 12 4.2 Weaknesses 12 4.3 Opportunities 13 4.4 Threats 13 5.0 STRATEGIES ANALYSIS 14 5.1 Key Strategic Issues 14 5.2 Ansoff Matrix 15 5.2.1 Market Penetration 15 5.2.2 Market Development 15 5.2.3 Product Development 16 5.2.4 Diversification 16 5.3 SFA ANALYSIS 16 6.0 IMPACT OF SELECTION STRATEGIC OPTION 17 6.1 Internal Stakeholders 17 6.2 External Stakeholders 18 6.2.1 Stockholders 18 6.2.2 Government 18 7.0 IMPLEMENTATION ISSUES 19 TASK B 20 BIBLIOGRAPHY 22 APPENDIX 24 Appendix I: Market Shares of Automakers in U.S 24 Appendix II: Sales and Market Shares 25 Appendix III: General Motors Operating Margin, 1959-2008 26 Appendix IV: Revenues of GM 28 Appendix V: SFA 29 1.0 INTRODUCTION The world automobile industry is one of the largest industries and the vehicles of all kinds are manufactured in this industry. In developed countries, the automotive industry is facing various problems. However, the developing countries automotive industry is showing consistent and substantial growth. The market in developed countries has totally saturated and now the automobile companies are trying to go for market development strategies especially in developing countries of South America and Asia. The global financial crisis, increasing oil prices and worsening macroeconomic indicators have severely affected the automobile industry. The crisis has pushed the U.S. largest automaker, General Motors to the bankruptcy Chapter 11. Therefore, the decision of whether to withdraw its Europe operations or not, has become an important strategic decision for GM. In this project, strategic analysis of GM has been done to analyse the suitable option for the company. 2.0 EXTERNAL ANALYSIS According to Hitt, Ireland, & Hoskisson (2008), the external analysis is important because it assesses the impact of external environment on the growth and profitability of company. 2.1 PESTLE In the context of strategic planning, PESTLE analysis is very significant because it offers a starting point for the analysis of external environment. (Appendix I) 2.1.1 Political The USA foreign policy had a very strong influence on General Motors in withdrawing its operations from Europe. During the period of President George Bush, the buyers of American cars had a very negative perception about the Bush administration. Therefore, a lack of interest was seen and the sales of American Vehicles were declined especially that of General Motors. The federal government of USA also influences the management decisions of GM regarding the plant locations, new models, fuel efficiency etc. It has been mentioned in Brendan (2009) that recently, Obama has taken into consideration the involvement of government in management decisions of company and has decided to liquidate government stakes from GM. 2.1.2 Economic Increasing costs of raw material such as steel, aluminum, copper, lead and platinum – GM managed the risk by using derivatives and hedging the purchases of raw materials Tightening of credit markets – company was affected by it in Western Europe and United States Volatility in oil prices – resulted in declining sales of leased and other vehicles. According to Golde (2009), “GM sales began to decline earlier in the decade as rising oil prices led to a decrease in light truck and SUV sales.” Decrease in employment rate - lowered the motivation of employees A report of Global Economic Crisis (2009) analysed that problems in manufacturing capacity because of lack of investments in infrastructure development are the other reasons affecting the automobile companies. As mentioned by Hammond (2005), another important thing is that in the last few years, the world’s automobile companies have given enough consideration towards ‘green cars’ to save economic resources, however, GM has been more concerned about its big cars instead of smaller fuel efficient cars. 2.1.3 Social Factors During the last few years the urbanisation, population growth and household size are increasing, therefore, an increase demand of cars has been noticed. However, the changing preferences of the people such as the aim to go green and the different values of customers affected the GM strategy negatively. The reason is that GM has been given more focus towards big cars instead of manufacturing fuel-efficient cars. 2.1.4 Legal Vehicle exhaust emission standards – U.S federal government imposes such laws and government of some states such as California. Vehicle evaporative emission standards Onboard diagnostic system (OBD) requirements EPA and CARB requirements The Clean Air Act European Laws: UN ECE - Strict emission control requirements on vehicles sold in all 27 EU Member States Incentives to qualifying low emission vehicles through tax benefits Pre-production testing of vehicles, testing of vehicles Future requirements of emission standards – Euro 5 standards from September 2009 and Euro – 6 standards from 2014 Negative impact of local industry protection policies of governments 2.1.5 Technological The additional legal requirements in Europe will demand more diesel vehicles that will enhance the technological requirements thereby, increasing the costs of diesel engines. General Motors also is searching the best alternatives for the gasoline. If it gets successful then definitely the dependency on the petroleum will be reduced. According to GM, “Right now in the U.S. we offer 17 vehicle models from all four of our brands that can run on E85 – a fuel blend made of 85% ethanol and 15% gasoline” (General Motors: Environmental Commitment, 2009). 2.1.6 Ecological1 Environmental protection laws such as regulating air emissions, environmental clean up and waste management Fund remediation actions regardless of fault – company incurred fund remediation including ongoing operations and maintenance, were $94 million, $104 million and $107 million in 2008, 2007 and 2006 Green concerns - A 2010 target of an 8% reduction in CO2 emissions as compared to 2005 emission levels Noise regulations 2.2 Porter Five Forces Porter’s five forces analysis may provide a framework about how forces may influence General Motors. Based on this model, industry context of General motors can be understood. 2.2.1 Threats of Substitutes Although product-switching cost is high in the automobile industry and the demand-elasticity is low, however, the increasing competition and high prices of GM vehicles have posing threats of substitutes for the company. For example, according to the motor report website (http://www.themotorreport.com.au/292/toyota-world-no1/), in 2007, the revenue of Toyota, the major rival of General Motors grew faster. 2.2.2 Bargaining Power of buyers During the last few years, the bargaining power of buyers has been increasing because automobile suppliers are increasing. As mentioned on (http://www.quickmba.com/strategy/porter.shtml), the other factors, which increase the bargaining power of buyers, include the increasing brand identity of various automobile companies, availability of substitutes, increasing automobile buyers’ incentives etc. 2.2.3 Bargaining Power of Suppliers The automobile industry faces high bargaining power of suppliers because of the fewer suppliers’ concentration in the industry, significant cost to switch the suppliers and significant cost involved in forward integration. GM has been successful in dealing with the suppliers for example, in 1968; it became the first automobile company, which established a formal supplier program. Moreover, GM has mentioned on its website (http://www.gm.com/corporate/dealers/diversity/index.jsp), that to reduce its power of suppliers, it has promoted supplier diversity. 2.2.4 Rivalry between existing competitors The world automobile industry has faced a drastic crisis during the last few years. According to (http://www.dw-world.de/dw/article/0,,3801809,00.html), the head of Eurogroup and the foreign minister of Germany argued to develop a rescue package to save the local manufacturers. Such policies enhanced the competition of GM in European market. 2.2.5 Threat of new competitors Since the automobile industry requires huge investments therefore, the threats of new entrants faced by GM have never been high. However, as mentioned by Business reference services (http://www.loc.gov/rr/business/BERA/issue2/industry.html), the international expansion of automobile companies has been appeared as a major threat for the car manufacturers. 2.3 Market Segmentation The target market of GM based on geographical segmentation is GM North America, GM Europe, GM Latin America/Africa/Mid-East and GM Asia Pacific. There are different vehicle brands, which are targeting different consumer markets. Malmo (2009) argues that during the last 40 years, GM has abandoned its previous market segmentation strategy and now it has been focusing on segmenting the market within each brand. There are total eight global architectures of GM, which are catering to different geographical markets. According to GM annual report 2008, the global architectures include: 1. Mini Vehicles 2. Rear-wheel drive Vehicles 3. Small Vehicles 4. Luxury Rear-wheel drive Vehicles 5. Compact Vehicles 6. Compact Crossover Vehicles 7. Midsize Vehicles 8. Midsize Trucks 3.0 INTERNAL ANALYSIS Hirsch (2000) explains that internal analysis of GM may help to analyse the current capabilities of the company and to conclude its strengths and weaknesses. 3.1 Strategic Capabilities The strategy of GM during the last two years was to produce green cars. According to the Investor Guide (2008), the new car models were expected to hit the U.S. dealers in 2010. The strategic capabilities of the companies are evident from the fact that it has hired most skilled labour of the market, has developed good contacts in its industry and it is getting the material from one of the reputable and largest suppliers Delphi. Therefore, if the company ever decides to take an important strategic step, it will not face lack of strategic capabilities. 3.2 Core Competencies Innovation is considered as the core competency of GM and because of this competency, it has been able to maintain a reputable position. According to reference of business, “The core competency of GM rests in the development and fabrication of products powered by gasoline- or diesel fueled engines (References for business, n.d).” This shows that a great portion of the funds of the company is invested in research and development. Surviving in a competitive automobile industry is not very easy for the company and GM has been able to maintain its position through its innovation. 3.3 Value Chain In order to ensure profitable operations, GM has been giving considerable attention to its value chain process. As mentioned in the annual report 2008 of GM, the major supplier of GM is Delphi and to avoid the supply disruptions, the company purchases the components, systems, parts and all tools from the same source. The manufacturing process is well designed and efficient. Strong relations have been built with the distributors so that customers may get the vehicles conveniently. 3.4 Financial Analysis Market Share: The report, (http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9MjA3ODh8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1) shows that the world market share of GM has declined from 12.6% to 11.7% from 2008 to 2009. (Appendix I) shows that the market shares of GM as compared to Ford and Chrysler are the highest. Sales Growth: The sales growth of GM shows that during the years 2008 and 2009, the sales of all vehicles of GM have declined by 1.5%. Ford has shown the least decline of 1.0% in sales whereas; the sales of Chrysler have declined by 25%. (Appendix II) Operating Margin: The graph shows that the operation margin of GM has shown a variable trend however, until 2008, it has gone in negative. (Appendix III) Revenues: As mentioned by Money CNN (2008), the revenues of the company have declined by -12.1 % from year 2006 to 2007. Moreover, according to Securities Exchange Commission United States (2009), the revenues of the company in Europe have declined from $ 1177 million to -$ 295 million. It is also evident from (Appendix IV), that the revenues of the company are declining. 4.0 SWOT ANALYSIS According to Pearce (2007), SWOT analysis is considered is a very popular technique to get an idea about the current strategic position of the company. It provides a fit between organisation’s internal strengths/weaknesses and opportunities/threats. 4.1 Strengths World’s largest vehicle manufacturer with the production in 34 countries All brands are recognized in their target markets GM's OnStar subsidiary is considered as an industry leader in terms of safety, security and information services In the list of Fortune 500 companies published on Money CNN (2006), GM has been ranked on 3rd U.S. sales leader Market leader in the U.S. market Technological innovation and global partnering with other car makers Supported by U.S. government 4.2 Weaknesses In the last two years, the market shares of GM have fallen The sales of the company are declining because the demand of fuel efficient cars is increasing Major portion of revenues come from the U.S. market which is getting saturated Inadequate liquidity Government interests in the management decisions Declining revenues especially in Europe Dependent on Delphi (the supplier of the company) Reduced manufacturing capabilities The total pension and healthy liabilities incurred by GM are $24 per hour however; the industrial average is $12 per hour Bureaucratic culture and less employee participation In 2009, bankruptcy chapter 11 was filed against the company The viability plan of the company has reduced the management and employees incentives that may create problems in hiring and retaining employees Delphi is under bankruptcy and it in unlikely that it will come out of it without government support 4.3 Opportunities Expansion of operations Investments in fuel-efficient and hybrid cars Growing light truck market Use of low cost material in production such as plastic and fibreglass The Euro 6 regulation, which is expected to impose until 2014 is the one, which the GM is already meeting Product differentiation through customising product features The changing consumer demands and expanding consumer market is offering more space to come up with product development and innovation Investments in Green vehicles 4.4 Threats Businesses outside U.S. expose the company to more risks such as currency exchange Stringent automobile policies and regulations Increase in future costs of materials because of encouragement of diesel cars as a result of environmental safety concerns Deteriorating image of the company because of bankruptcy chapter 11 Declining manufacturing capacities because of the lower investments of U.S. in infrastructure developments Increasing competition Increasing technological changes and their high costs Financial recession and poor macroeconomic indicators Local industry protection policies imposed by the governments of other states A regular increase in oil prices Impact of negative developments in consumer credits on sales is expected in 2009 and in future Failure of suppliers to meet the company’s demand in future because of poor economic conditions 5.0 STRATEGIES ANALYSIS 5.1 Key Strategic Issues Based on SWOT analysis, following are the five strategic issues that General Motors is facing. 1. Decline in sales and declining market shares 2. Withdrawal of operations from Europe 3. Liquidation problems and lack of funding for new investments (increasing dependence on government) 4. Stringent automobile regulations and the strategy of the company 5. Inability to set up new plants to increase manufacturing capacity to meet the market demands 5.2 Ansoff Matrix Following is the Ansoff Matrix: Existing Products New Products Existing Markets Market Penetration Product Development (GM should pursue this strategy) New Markets Market Development (GM is pursuing this strategy) Diversification Source: Cited in (http://www.mindtools.com/pages/article/newTMC_90.htm) 5.2.1 Market Penetration The aim of pursuing market penetration strategy is to achieve growth with existing products in the current market segments of the company. This strategy is not suitable for GM because it is usually adopted to increase the market shares of the organisation. GM is the market leader in the U.S. and it is dealing in an industry, where the product life cycle is very short, therefore, it cannot increase its market shares with the existing products. 5.2.2 Market Development In the market development strategies, the company offer its existing products to the new markets and expands its consumer market. This strategy is not recommended to GM because GM is already facing problems in its European operations. However, it is interesting to note that GM has been pursing market development strategies for the last few years. 5.2.3 Product Development Product development is the strategy in which the firm introduces new products to the existing customers. At this point of time, GM should go for product development strategies because the major reason because of which the sales of the company are affecting is the inability of the company to meet the customer demands for fuel-efficient and hybrid cars. 5.2.4 Diversification Diversification strategies are adopted when the firm plans to opt for new businesses by developing new products. GM is not financially stable enough that it may go for these strategies. Therefore, the diversification strategies are not recommended to the company. 5.3 SFA ANALYSIS The SAF analysis has been summarized in the following table. The format of the table has been taken from Benalco website. (Appendix V) Based on the SAF analysis, it is clear that the most suitable strategy for General Motors is Product development. By developing the fuel efficient, hybrid cars and cars with alternative energy sources, the company can sustain its market shares and declining sales. Moreover, it is also clear that the other three strategies are not suitable for the organisation 6.0 IMPACT OF SELECTION STRATEGIC OPTION If GM withdraws its operations from Europe then it may affect the company both positively as well as negatively. If at one end, it will reduce the structural costs of the company, then at the other end it will also decrease a major chunk of the revenues of the company coming from European operations. 6.1 Internal Stakeholders According to Frey (2009), decision of the company will have a very strong impact on the employees, reason being that GM Europe employs about 50,000 people at 10 European production facilities. If GM withdraws its operations, the unemployment rate will increase. The workers will strongly oppose and fight for the survival of the factory. The job insecurity among the employees of the company will increase, which will result in demotiavtion of the employees. However, if the company continues its operations, the negative revenues of the company will continue and the structural costs will increase. This will reduce the incentives of the employees and it will become difficult for the company to offer the same corporate culture to the workers. 6.2 External Stakeholders 6.2.1 Stockholders If GM withdraws its operations from Europe, the management may face the strong opposition of the shareholders because the revenues of the company are negative and it will not be possible to generate positive revenues. When the shareholders will not get dividends and positive cash flows from European operations, they will surely oppose the management. 6.2.2 Government If GM withdraws its operations from Europe, then it will have a negative impact on the European economy. It has been analysed by World Socialist Website (http://www.wsws.org/articles/2009/nov2009/opel-n28.shtml) that about 9,000 to 50,000 people will lose their jobs because of withdraw of GM Europe operations. Therefore, the German government is considering the acquisition of GM stakes by Magna as the best possible solution. However, if GM continues its operations, based on the improving business environment of GM during the last few months, the unemployment issues will not raise. 7.0 IMPLEMENTATION ISSUES The recent global financial crisis pushed GM Europe to the brink of bankruptcy. and China. There are various implementation issues, which GM would be facing during its GM Europe restructuring plan. Withdrawing its operations from Europe is a major decision for General Motors because Opel and Vauxhall Motors are the backbones of GM global strategy. Therefore, if GM withdraws its European operations by selling off its stake to Magna, its global strategy may be affected. Such concerns have been raising problems for GM to implement this plan. As reported in Wall Street Journal (http://online.wsj.com/article/BT-CO-20091205-700155.html), that the restructuring plan of GM is about 90 to 95 percent complete and it has been argued by the President of GM Europe group Reilly. Reilly also explained the key issues, which the company will face after restructuring. First, it was argued by Reilly that about 8300 jobs would be cut down. Second, the company may face financial problems and it expects to get huge financial aid of $3.3 billion from the government of European countries. Third, the revenues of GM Europe after restructuring will be negative in 2010. Fourth, the capacity of the company will be cut off which will result in under-utilisation of capacity. It has been also mentioned in Wall Street Journal that Reilly considers the current restructuring plan as a positive move because one part of financial aid would be spend for restructuring and the three portions would be spent during the period of negative revenues of the company. TASK B a) Evaluate the leadership within your task group for this module and issues arising from it Being a leader, I have faced various problems in the group. Many of these problems were of minor nature whereas, many problems required considerable attention. The major problems, which I faced, were conflicts arising because of delegation to tasks to the group member, conflicting opinions among the group members, handling the free-riders, motivating the members and assessing the performance of each individual separately. b) Reflect on your personal leadership development. While leading the group, I have passed through different stages of leadership development. I learnt how to delegate tasks, how to encourage members to achieve the tasks, how to resolve the conflicts and how to appreciate them after achieving the tasks. I have analysed that there are some personal characteristics, which were my personal traits however, they really helped me out as a group leader. If I would not have led the group, I might not be able to analyse my leadership skills. With reference to the different leadership theories mentioned by (Bolden, ea tl, 2003), I have found following leadership traits in me including adaptability, ambitiousness, cooperativeness, tolerance and decisiveness. However, I was lacking assertiveness, dominance and dependability. If I consider McGregor theory X and Theory Y, I would categorize myself as a theory-Y manager. My behaviour has been very supportive to the group members and I tried to develop two way communications by listening to the group members and supporting them. Moreover, I also encouraged the group members by involving them in each decision of the group. Therefore, on the leadership model of Heresy-Blanchard, I will group my behaviour in the category of ‘Supportive Behaviour’ instead of decisive behaviour (Bolden ea tl, 2003). Finally, in the four kinds of leadership styles of Kurt Lewin including Dictator, Autocratic, Participative and Laissez Faire, I would categorise my leadership style as participative leadership style. Therefore, I believe that group leadership really help to analyse one’s leadership skills and in leadership development. c) Analyze the competences that you need to maintain and enhance to make an effective contribution as a leader within a group context. Based on my experience from group leadership, I have analysed that the leadership skills, which I have mentioned above, needs to be maintained and enhanced. However, I need to develop more competencies such as inspiring nature, intelligence and forward-looking approach. I believe that if I have these traits then I could further enhance the productivity of my group because a leader has to set the example for the followers. Charisma and inspiration are very important for the leaders to make the members of the group to achieve their delegated tasks. \\ BIBLIOGRAPHY 1. Annual reports (2009) Available at: http://www.sec.gov/Archives/edgar/data/40730/000119312509045144/d10k.htm#toc75433_52 2. Benalco, (n.d.) Available at: http://www.benalco.com/pdf_files/StrategicAnalysis.pdf (Accessed 20 December 2009) 3. BERA (2004) Available at: http://www.loc.gov/rr/business/BERA/issue2/industry.html (Accessed 19 December 2009) 4. Bolden, R., Gosling, J., Marturano, A. and Dennison, P. (2003) A review of Leadership Theory and Competency Frameworks. Available at: http://www.leadership-studies.com/documents/mgmt_standards.pdf (Accessed 20 December 2009) 5. Brendan (2009) Available at: http://www.brendan-nyhan.com/blog/2009/06/shouldnt-obama-limit-govt-influence-on-gm.html (Accessed: 19 December 2009). 6. DW-World (2008) Available at: http://www.dw-world.de/dw/article/0,,3801809,00.html (Accessed 22 December 2009) 7. Frey, G. (2009) General Motors expects a plan for its European operations by mid December. Available at: http://autos.ca.msn.com/news/canadian-press-automotive-news/article.aspx (Accessed 20 December 2009) 8. General Motors, (2009.) Available at: http://www.gm.com/corporate/dealers/diversity/index.jsp (Accessed 19 December 2009). 9. General Motors: Environmental Commitment (n.d.) Available at: http://www.gm.com/corporate/responsibility/environment/welcome_message.jsp (Accessed: 19 December 2009). 10. General Motors Operating Margin, (2009) Available at: http://4.bp.blogspot.com/_ov-pT1x-W8Y/SdGSsaE3kMI/AAAAAAAADOw/XeyaqcpOd1k/s1600/gm.png (Accessed 20 December 2009) 11. Global Economic Crisis (2009) Available at: http://www.globaleconomiccrisis.com/blog/archives/tag/general-motors (Accessed: 19 December 2009). 12. Golde, M. (2009) The Failure of General Motors Is a Failure of Government Policy. Available at: http://seekingalpha.com/article/141869-the-failure-of-general-motors-is-a-failure-of-government-policy (Accessed: 19 December 2009). 13. Hammond, A. L. (n.d.) Car List website. Available at: http://www.carlist.com/autonews/2005/autonews_131.html (Accessed: 19 December 2009). 14. Hirsch, L. M. (2000) Advanced management accounting. 2nd Illustrated. Cengage Learning. 15. Hitt, A. M., Ireland, D. R. & Hoskisson, E. R. (2008) Strategic management: competitiveness and globalization : concepts & cases. 8th edn. Cengage Learning. 16. Investor Guide, (2008) Available at: http://www.investorguide.com/060308/General-Motors-Sudden-Strategy-Shift.html (Accessed 20 December 2009) 17. Mindtools, (n.d.) Available at: http://www.mindtools.com/pages/article/newTMC_90.htm (Accessed 20 December 2009) 18. Money CNN, (2008) Available at: http://money.cnn.com/magazines/fortune/fortune500/2008/snapshots/175.html (Accessed 20 December 2009) 19. Pearce, (2007) Strategic Management. 10th edn. Tata McGraw-Hill. 20. Quick MBA, (n.d.) Available at: http://www.quickmba.com/strategy/porter.shtml (Accessed 19 December 2009). 21. References for business, (n.d.) Available at: http://www.referenceforbusiness.com/encyclopedia/Eco-Ent/Economies-of-Scope.html (Accessed 22 December 2009) 22. Sloat, S. (2009) Update: GM Europe Restructuring Plan is 90%-95% Complete. Available at: http://online.wsj.com/article/BT-CO-20091205-700155.html (Accessed 22 December 2009) 23. Securities Exchange Commission United States, (2009) Available at: http://www.sec.gov/Archives/edgar/data/40730/000119312509045144/d10k.htm#toc75433_52 (Accessed 20 December 2009) 24. The Motor Report, (2007) Available at: http://www.themotorreport.com.au/292/toyota-world-no1/ (Accessed 22 December 2009) 25. WSJ, (2009) Available at: http://online.wsj.com/mdc/public/page/2_3022-autosales.html#autosalesE (Accessed 20 December 2009) 26. WSWS, (2009) Available at: http://www.wsws.org/articles/2009/nov2009/opel-n28.shtml (Accessed 20 December 2009) APPENDIX Appendix I: Market Shares of Automakers in U.S 2008 (%) 2007 (%) GM 22.1 23.5 Toyota 16.5 15.9 Ford 14.7 15.2 Chrysler 10.8 12.6 Honda 10.6 9.4 Nissan 7 6.5 Source: SEC The graph shows that during the years 2008 and 2009, the market shares of GM are the highest in the U.S. market. Although the shares of GM have been rising and declining during the two years however, overall, GM has been the U.S. market leader. Appendix II: Sales and Market Shares   SALES YTD SALES % MARKET SHARE Nov Nov % Chg 2009 2008 % Chg Nov Nov YTD YTD 2009 2008 2009 2008 2009 2008 General Motors Corp. 150,305 152,552 -1.5 1,856,399 2,714,600 -31.6 20.1 20.4 19.7 22    Total Cars 57,743 58,069 -0.6 789,177 1,153,058 -31.6 7.7 7.8 8.4 9.3      Domestic Car 55,531 54,748 1.4 754,020 1,099,903 -31.4 7.4 7.3 8 8.9      Import Car 2,212 3,321 -33.4 35,157 53,155 -33.9 0.3 0.4 0.4 0.4    Total Light Trucks 92,562 94,483 -2 1,067,222 1,561,542 -31.7 12.4 12.7 11.4 12.6      Domestic Truck 92,562 94,483 -2 1,067,222 1,561,542 -31.7 12.4 12.7 11.4 12.6      Import Truck ... ... n.a. ... ... n.a. ... ... ... ... Ford Motor Company 118,215 118,319 -0.1 1,437,736 1,774,492 -19 15.8 15.8 15.3 14.4    Total Cars 42,479 37,272 14 534,476 628,878 -15 5.7 5 5.7 5.1      Domestic Car 42,479 37,272 14 534,476 628,878 -15 5.7 5 5.7 5.1      Import Car ... ... n.a. ... ... n.a. ... ... ... ...    Total Light Trucks 75,736 81,047 -6.6 903,260 1,145,614 -21.2 10.1 10.9 9.6 9.3      Domestic Truck 75,736 81,047 -6.6 903,260 1,145,614 -21.2 10.1 10.9 9.6 9.3      Import Truck ... ... n.a. ... ... n.a. ... ... ... ... Chrysler LLC 63,560 85,260 -25.5 844,879 1,363,309 -38 8.5 11.4 9 11    Total Cars 14,432 20,426 -29.3 201,740 377,616 -46.6 1.9 2.7 2.1 3.1      Domestic Car 14,432 20,334 -29 201,241 375,705 -46.4 1.9 2.7 2.1 3      Import Car ... 92 -100 499 1,911 -73.9 ... ... ... ...    Total Light Trucks 49,128 64,834 -24.2 643,139 985,693 -34.8 6.6 8.7 6.8 8      Domestic Truck 49,128 64,834 -24.2 643,139 985,693 -34.8 6.6 8.7 6.8 8      Import Truck ... ... n.a. ... ... n.a. ... ... ... ... Source: World Street Journal2 Appendix III: General Motors Operating Margin, 1959-2008 The following graph is showing that during the last 50 years, the operating margin of GM has been showing many drastic changes. However, the trend line shows that it is a downward trend and in the recent years, operating margin is negative. Source: BlogSpot3 Appendix IV: Revenues of GM The table is showing that although the revenues of GM have declined from 2007 to 2008 however, the revenues are positive expect that of revenues in Europe. In 2007, the EPS of GM has declined by -68.45. Revenues of GM 2008 2007 2006 Canada 123 522 596 Europe -295 1177 1642 Latin America 1087 1075 924 Asia-Pacific 42 86 79 Total Foreign 957 2860 241 Total Domestic 15901 8939 11581 Total 16858 11799 14822 Source: SEC Appendix V: SFA Alternatives Market Penetration Market Development Product Development Diversification Suitability: Address key issue? Strategic Logic This strategy only deals with strategic issue 1 To control the declining market shares and sales This strategy deals with strategic issue 2 To control the declining European sales by again starting operations in Europe This strategy deals with 1, 2, 3, 4 , 5 The declining sales can be controlled, Although the Europeans operations have withdrawn however, fuel efficient cars can be exported to Europe, Instead of making new investments the previous investments can be restructured for product development, environmental regulations will be met, the production of other cars which are not in demand can be stopped to lower manufacturing capacity needs This strategy does not address the key strategic issues of the company Feasibility: Funding? Capability? Competitor? No Yes Yes No Yes Yes Yes, the previous investments can be allocated here Yes Yes No, because the viability plan is hindering the hiring of skilled employees in different industry Yes Acceptability Stakeholders? Risk? Yes No Yes Yes Yes Yes No Too much high Read More