General Motors Case Study

Looking from different angles, General Motors is clearly having bad turn outs in their operations as indicated by their GM’s performance for the few years. Though GM’s assets increased from 2002 to 2004 yet their revenues barely increased over the same year and their net was almost stagnant on the same period. Amidst the different market forces affecting the General Motors such declining market shares caused by stiff market competition, rising cost of fuel, health care and pension costs for their employees, and so forth, GMC is facing enormous financial difficulties causing the company to earn a junk bond status for their investments.

What should GM do about its junk-bond status? GM should implement Related Diversification measures by developing low cost and fuel efficient quality cars in order to effectively regain the market share. Liquidation of assets and sell some company assets that are not performing well to have a tangible cash worth. Implement Retrenchment by regrouping through cost and asset reduction. The most well performing asset should be given more emphasis.

Why has GM lost much of its competitiveness? GM lost much of its competitiveness because. They failed to invest on product development by seeking to improve their current products and by developing cheaper but quality cars.  They also failed to developed new market for new products. This could have been done by increasing its market share through purchase of portions of stakes of local car makers in a particular country where market potential is high.

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Finally, GM has also failed to employ horizontal integration which seeks ownership or increased control over competitor. During GM’s earlier years, this was the strategy that brought the company rapid improvement and tremendous growth. To what degree is GM positioned to take advantage of new technology (e. g. , hybrid vehicles)? GM’s situation apparently is in high degree to take advantage of new technology in view of some of their outmoded units.

GM need market development by introducing present products or new services. They also need product development by improving present products or developing new ones. This means that GM has take advantage of new technology by developing cheaper but equip with latest technology cars to regain their competitive advantage. They also need to convert some of their asset into cash through asset reduction scheme for fluidity.

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