ENTREPRENUERSHIP DEVELOPMENT

ASSIGNMENT

Under the Supervision of

(Dr. KG Gupta)

Submitted by
Kanika Goyal

BBA

GITTARATTAN INTERNATIONAL BUSINESS SCHOOL

INTRODUCTION
General Motors (GM), in full General Motors Company, formerly General Motors Corporation,
American corporation that was the world’s largest motor-vehicle manufacturer for much of the
20th and early 21st centuries. It operates manufacturing and assembly plants and distribution
centers throughout the United States, Canada, and many other countries. The company’s major
products include automobiles and trucks, automotive components, and engines, and it is also
engaged in financial services. GM’s headquarters are in Detroit.

General Motors has been pushing the limits of transportation and technology for over 100 years.
Today, we are in the midst of a transportation revolution. And we have the ambition, the talent
and the technology to realize the safer, better and more sustainable world we want.

As an open, inclusive company, they are also creating an environment where everyone feels
welcomed and valued for who they are. One team, where all ideas are considered and heard,
where everyone can contribute to their fullest potential, with a culture based in respect, integrity,
accountability and equality.

Their team brings wide-ranging perspectives and experiences to solving the complex
transportation challenges of today and tomorrow.

Headquartered in Detroit, Michigan, GM is:

Over 180,000 people

Serving 6 continents
Across 23 time zones
Speaking 70 languages

At General Motors, innovation is their north star. As the first automotive company to mass-produce
an affordable electric car, and the first to develop an electric starter and air bags, GM has always
pushed the limits of engineering.

GM is the only company with a fully integrated solution to produce self-driving vehicles at scale.
They are committed to an all-electric future. 2.6 billion EV miles have been driven by drivers of
five GM electrified models, including the Chevrolet Bolt EV.

Their future depends on responsible stewardship of the earth, and they continually seek creative
and innovative solutions for the environment. Their policies and technologies promote a cleaner
planet from supply chain to manufacturing to the vehicles they put on the road.

Across 14 recent new-vehicle launches, they’ve trimmed an average of 357 pounds per vehicle,
saving 35 million gallons of gasoline and avoiding 312,000 metric tons of CO2 emissions per year.

Today, their vehicle manufacturing process has the lowest environmental footprint in their history,
thanks to steady progress toward achieving their 2020 operational commitments to reduce
energy, carbon, water and waste intensity.

They are General Motors. They transformed how the world moved through the last century. And
they’re determined to do it again as they redefine mobility to serve their customers and
shareholders and solve societal challenges.
Early History

Under the leadership of William C. Durant, the General Motors Company was founded in 1908 to
consolidate several motorcar companies producing Buick, Oldsmobile, Cadillac, Oakland (later
Pontiac), Ewing, Marquette, and other autos as well as Reliance and Rapid trucks. GM introduced
the electric self-starter commercially in its 1912 Cadillac, and this invention soon made the hand
crank obsolete. GM remained based in Detroit and was reincorporated and named General
Motors Corporation in 1916. The Chevrolet auto company and Delco Products joined GM in 1918,
and the Fisher Body Company and Frigidaire joined in 1919 (the latter was sold in 1979).
Durant was forced out of the company in 1920 and was succeeded by Alfred P. Sloan, Jr., who
served as president (1923–37) and then as chairman of the board of directors (1937–56). Sloan
reorganized GM from a sprawling, uncoordinated collection of business units into a
single enterprise consisting of five main automotive divisions—Cadillac, Buick, Pontiac,
Oldsmobile, and Chevrolet—the activities of which they’re coordinated by a central corporate
office equipped with large advisory and financial staffs. The various operating divisions retained
a substantial degree of autonomy within a framework of overall policy; this decentralized concept
of management became a model for large-scale industrial enterprises in the United States. Sloan
also greatly strengthened GM’s sales organization, pioneered annual style changes in car models,
and introduced innovations in consumer financing.

Global Expansion
By 1929 General Motors had surpassed the Ford Motor Company to become the leading
American passenger-car manufacturer. It added overseas operations, including Vauxhall
of England in 1925, Adam Opel of Germany in 1929, and Holden of Australia in 1931. The Yellow
Truck & Coach Manufacturing Co. (now GMC Truck & Coach Division), organized in 1925, was
among the new American divisions and subsidiaries established. In 1931 GM became the world’s
largest manufacturer of motor vehicles. By 1941 it was making 44 percent of all the cars in the
United States and had become one of the largest industrial corporations in the world.
Along with other U.S. automobile manufacturers, the company faced increasingly severe
competition from Japanese automakers in the 1970s and ’80s, and in 1984 GM began a new
automotive division, Saturn, that used highly automated plants to produce subcompact cars to
compete with Japanese imports. While GM’s modernization efforts showed some success, heavy
losses in the early 1990s forced the company to close many plants and reduce its workforce by
tens of thousands.

Like other American automakers, however, GM made a robust recovery by the middle of the
decade and returned its focus to its automotive businesses. It sold Electronic Data Systems in
1996, and in 1997 it sold the defense units of its Hughes Electronics subsidiary to the Raytheon
Company, thus leaving the computer-services and defense-aerospace fields in order to
concentrate on its automotive businesses. General Motors became the sole owner
of Saab Automobile AB in 2000. By the early 21st century GM had equity shares in a number of
car companies, including Fiat, Isuzu, Fuji Heavy Industries (Subaru), and Suzuki. In 2004,
however, it discontinued the Oldsmobile brand. Four years later GM was surpassed by Toyota
Motor Corporation as the world’s largest automaker.
During this time GM also sought to decrease its financial service holdings through various deals
concerning General Motors Acceptance Corporation (GMAC) and its related divisions. GMAC had
been founded in 1919 to finance and insure the installment sales of GM products and had later
expanded into other businesses. In 2006 GM sold a 51 percent stake in GMAC to Cerberus
Capital Management, and GMAC was later renamed Ally Financial. In addition, GMAC’s
mortgage and real estate units were subsequently sold.
REASON FOR FIALURE
Multiple reasons for the failure of General Motors are

1. Bad financial policies

You might be surprised to learn that GM has been bankrupt since 2006 and has avoided a filing
for years thanks to the graces of the banks and bondholders. But for years it has used cars as
razors to sell consumers a monthly package of razor blades -- in the form of highly profitable car
loans. And the two Harvard MBAs who drove GM to bankruptcy -- Rick Wagoner and Fritz
Henderson -- both rose up from GM's finance division, rather than its vehicle design operation.

2. Uncompetitive vehicles

Compared to its toughest competitors -- like Toyota Motor Co. (TM) -- GM's cars were poorly
designed and built, took too long to manufacture at costs that were too high, and as a result, fewer
people bought them, leaving GM with excess production capacity.

3. Ignoring competition

GM has been ignoring competition -- with a brief interruption (Saturn in the 1980s) -- for about 50
years. At its peak, in 1954, GM controlled 54 percent of the North American vehicle market. Last
year, that figure had tumbled to 19 percent. Toyota and its peers took over that market share.

4. Failure to innovate

Since GM was focused on profiting from finance, it did not really care that much about building
better vehicles. GM's management failed to adapt GM to changes in customer needs, upstart
competitors, and new technologies.

5. Managing in the bubble

GM managers got promoted by toeing the CEO's line and ignoring external changes. What looked
stupid from the perspective of customer and competitors was smart for those bucking for
promotions.

GM makes cars people don’t want, GM is too slow to innovate because of its size, GM is too
bureaucratic and unable to adjust to changing markets, GM’s dealer network is too large and GM
sold off its formerly profitable financing business GMAC.

GM stopped making a profit. The reason any company exists is to make a profit. When companies
stop making a profit they fail. measure profit using the income statement. The income statement
simply takes what you sold in a period and subtracts the costs in the business during the same
period. If sales are greater than costs or expenses then there is profit. If sales are less than costs
then there is a loss.

GM stopped making profit in 2005. Since that time GM lost more than $90 billion through the 1st
quarter of 2009. GM has been very, very bad for several years. The key to GM’s losses has to do
with sales and fixed costs. Cutting cost is the most painful thing you have to do as an owner
because it usually means having to cut jobs.

The problem for GM was that when the sales slowed down, they had trouble cutting costs because
most of their costs were fixed. In other words, a lot of their costs did not go down as their sales
went down. In most manufacturing companies, when sales go down, some of the bigger costs go
down as well (if you aren’t selling as much of your product, then you cut back on manufacturing
through layoffs, through reductions in material purchases, and so on). GM has tremendous fixed
costs related to their union contract. Closing a plant, for example, did not necessarily mean the
workers lost their jobs. Company pensions and legacy health care costs were fixed as well. So
when sales went down, many costs stayed fairly constant. And that led to losses.

As the losses mounted and the economy struggled, these losses became so significant that GM
could not survive as a viable business. In spite of billions of dollars of government support, the
only solution for GM is to declare bankruptcy and try to lower those fixed costs through a court
process.
REVIVAL OF GM
GM teetered toward liquidation in 2009, an Obama-appointed SWAT team, led by financier
Steven Rattner, swept in and hatched a radical plan: Through a novel use of the bankruptcy code
saved the company by segregating and spinning out its valuable assets, while Washington
furnished billions in taxpayer funds to make sure the company was viable. The real GM turnaround
story, significant in saving the auto industry and the economy.