FROM BIRTH TO BANKRUPTCY IN 2009

GROUP ASSIGNMENT
Assignment 2 - Group 1 - CC02
Strategic Management
TEAM MEMBERS
Full Name Student ID

Nguyễ n Quố c Bảo 2152422

Lê Ngọc Minh Thư 2152304

Nguyễ n Phương Nhi 2152839

Nguyễ n Lê Anh Thư 2153019

 Company's history, development, and growth

Internal strengths and weaknesses

External environment
Table of SWOT Analysis
contents Corporate-level strategy

Business-level strategy

The company’s structure and control systems

Recommendations
INTRODUCTION

General Motors
Corporation
History and Early Development

The company, founded in 1908 by William C. Durant, quickly

became a significant player in the automotive industry by
consolidating 25 independent car companies.

GM aimed to cater to wealthy customers

However, this strategy placed GM in direct competition with

Ford Motor Company, which had revolutionized car
manufacturing through mass production techniques
OVER TIME
INTRODUCTION

Strategic shift
under Alfred P. Sloan
The 1920s

The corporation faced with the inefficiencies of managing multiple car companies producing
hundreds of models, and the challenge posed by Ford's singular, mass-produced Model T.

He streamlined operations and introduced a

range of automobiles that targeted different
market segments, thereby broadening GM's
appeal beyond the affluent.
OVER TIME
INTRODUCTION

Growth and Challenges

GM's journey through the 20th century was fraught with challenges...

The company achieved remarkable growth, becoming the largest and most profitable industrial
corporation in the world. However, the latter decades saw a decline in profitability and market
share.
by 2008, the economic recession had severely impacted the United States
car sales, leading to a significant financial crisis for GM.
workforce was substantially reduced from more than 700,000 employees in
1995 to less than 200,000 by the end of 2009.
GM's market share in the United States plummeted from over 40% in 1980 to 19%
The financial difficulties culminated in 2009

Reflect a journey of innovation, strategic shifts,

and challenges
2. The identification of the
company’s internal strengths and
weaknesses
General Motor (GM) company
Identify the company's strengths and weaknesses
that played a pivotal role in the company's journey from
being a dominant player in the US market to filing for
bankruptcy in June 2009.
Furthermore, we will present a concise summary
matrix that assesses the strengths and weaknesses
weight in the organization's strategic factor of GM
Company, which will inform the subsequent SWOT
analysis.
 2.1 Internal Strengths:
General Motor (GM) company
1.Diversification (S1):
GM's diverse range of products allowed it to cater to
different market segments effectively. GM's strategy of
offering a wide variety of vehicles (from cars to full-size
trucks, lightweight trucks, vans, ambulances, and
specialized vehicles)
3.Adoption of New Techniques (S3):
General Motors (GM) continually embraced innovation in
manufacturing, starting with imitating Ford's mass
production in the 1920s. These adoptions enabled the
company to produce vehicles of higher quality at lower
costs, enhancing its competitiveness and profitability in the
market.
2.Decentralization and Autonomy (S2):
Under the leadership of CEO Sloan, GM decentralized its
operations and granted autonomy to its departmental groups
“to operate their profit and have its own set of support
functions, such as sales, manufacturing, engineering, and
finance”.
4.Outstanding segmentation
identification ability (S4):
General Motors (GM) demonstrated an exceptional ability to
identify customer segments based on their socioeconomic
status. The company effectively segmented its customers into
five categories, ranging from entry-level to luxury cars
 2.1 Internal Strengths:
General Motor (GM) company
5.Partnerships and Global Expansion
(S5):
GM's establishment of partnerships and expansion into
global markets strengthened its presence and market
reach.
7.Structural changes for efficiency
(S7):
GM undertook structural changes to streamline operations,
decentralize decision-making, and integrate design and
manufacturing functions, aiming to achieve economies of
scale and improve coordination across divisions and
regions.
6.Unique Brand Portfolio (S6):
GM established distinct unique brands such as Chevrolet,
Pontiac, Oldsmobile, Buick, and Cadillac under their portfolio,
each catering to specific socioeconomic segments, allowing
for effective market segmentation.
8.Focus on quality improvement (S8):
GM always tries to adapt to the latest technology as well as
invest in innovative technology in the market and seek expert
partners to help them build up their latest and most efficient
manufacturing process.
9.Product rationalization (S9):
The primary aim of this rationalization was to simplify its
operations and reduce costs associated with production and
supply chain management. By streamlining its processes, GM
could focus on developing high-quality vehicles, improve its
efficiency, and remain competitive in the global market.
 2.2 Internal Weaknesses:
General Motor (GM) company
1.Lack of foresight and planning (W1):
The company failed to accurately forecast trends in
consumer behavior, global competition, and technological
advancements. Additionally, the company failed to plan for
the growth of its competitors, particularly Japanese
automakers, which resulted in a gradual decline in its
market share.
3.Product range (W3):
GM just specialized in relatively expensive vehicle models,
limiting its appeal to wealthier consumers. This allowed
competitors like Toyota to capture market share by offering
cheaper alternatives appealing to a wider demographic.
2.Lack of innovation (W2):
General Motors (GM) had focused on chasing after the car
technology of Japanese automakers rather than forecasting
and planning for its innovative car technology that meets its
quality standard, differentiation, and suits the company
competency or trying to reach just a small segment of their old
customers instead of try to please all the market segment.
4.Failure to control expenses (W4):
GM incurred unnecessary expenditures and struggled to manage
production costs effectively. Despite efforts to improve quality
and reduce costs, results were not significant, leading to
strained profits.
 2.2 Internal Weaknesses:
General Motor (GM) company
5.Overreliance on internal operations
(W5):
While vertical integration in the past (producing Fisher Body
Company's car bodies, and Delco electrical/electronic
components) provided control over the supply chain, it also
made GM higher manufacturing costs, vulnerable to
inefficiencies within its operations, hindering adaptability
and responsiveness.
7.Structural changes for efficiency (S7):
GM's historical reluctance to make significant cuts to its
workforce and address legacy cost issues promptly
reflected a lack of adaptability and agility in responding to
changing market conditions and competitive pressures.
6.Inefficient operations (W6):
GM struggled with high operating costs and inefficiencies, as
evidenced by its inability to match the low costs of Japanese
manufacturers despite significant investments in technology
and processes.
8.Ineffective acquisitions and alliances
(W8):
GM's acquisitions of premium European brands like Saab and
stakes in Fiat proved to be costly failures, leading to significant
financial losses without corresponding improvements in
technology or market position.
9.Government intervention (W9):
GM's entry into bankruptcy and subsequent restructuring under
government oversight highlighted the company's inability to
independently address its financial challenges and reposition
itself for long-term success without external intervention and
support.
2. Internal Factor Analysis – Summary Matrix IFAS
3. The nature of the external environment
surrounding the company

Oppotunities Threats

1. Intense Competition (T1)

2. Environmental Regulations and
1. Market Influence (O1)
Activism (T2)
2. Adaptation to Market Demands (O2)
3. Technological Disruption (T3)
3. Acquisition Strategy (O3)
4. Global Economic Instability (T4)
4. Global Expansion(O4)
5. Competitors' Innovations (T5)
6. Shifting Consumer Preferences (T6)
3. External Factor Analysis – Summary Matrix EFAS
 4. SWOT Analysis
4.1 Summary Matrix
4.2 Developing Strategies
GM’s business strategy
Generic Business Strategy
Developed by Micheal Porter
 GM’s business strategy

Stage 1 (1900s):

During this period,

General Motors (GM)
pursued a strategy of
focused differentiation by
targeting a niche market
with luxury vehicles.
 GM’s business strategy

Stage 2 (1910-1970s):

As Ford introduced the

affordable and moderately
quality Model T, GM began
losing market share to
Ford.
 GM’s business strategy
Stage 2 (1910-1970s):

GM diversified its product

line to cater to a broader
range of customers, from
the lower to upper classes.
By outmaneuvering Ford,
GM forced its competitor
to restructure its business
operations, reclaiming its
position at the top of the
American auto market for
over 50 years.
 GM’s business strategy
Stage 3 (1970s):
Mercedes and BMW
emerged as direct
competitors to GM's luxury
segment. Meanwhile,
Japanese companies
demonstrated their Other Japan
companies
capabilities by introducing
affordable yet high-quality
vehicles, causing GM to
lose market share in the
lower and middle-class
segments.
 GM’s business strategy

Stage 4 (1970s-2000s):
a) Competing in product Other Japan
design: companies

Investing $1 billion in Saturn

in 1990, aiming to emulate Other Japan
Toyota's technology and companies

design.
 GM’s business strategy
Stage 4 (1970s-2000s):
a) Competing in product
design:
Investing $1 billion in Saturn
Other Japan
in 1990, aiming to emulate companies
Toyota's technology and
design.
-> Saturn failed due to a
lack of understanding of
lean manufacturing
 GM’s business strategy

Stage 4 (1970s-2000s):
b) Competing in quality: In Other Japan
companies
the early 2000s, GM
Other Japan
invested $1 billion in companies
building state-of-the-art
factories in Lansing and
Michigan to directly
compete with Japanese
companies in terms of
quality.
 GM’s business strategy
Stage 4 (1970s-2000s):
b) Competing in quality: In
the early 2000s, GM Other Japan
companies
invested $1 billion in
building state-of-the-art
factories in Lansing and
Michigan to directly
compete with Japanese
companies in terms of
quality.
-> The high investment
costs prevented GM from
turning a profit.
 GM’s business strategy
Foreign
Other Japan companies
companies
Stage 4 (1970s-2000s):
Other Japan
companies
c) Expanding market reach:
GM sought to increase its
profits by expanding into
other markets such as
China, Europe, and North
America through joint
ventures and acquisitions
of struggling companies.
 GM’s business strategy
Foreign
Other Japan companies
companies
Stage 4 (1970s-2000s):
c) Expanding market reach:
-> Acquiring struggling
companies proved to be a
mistake as they lacked the
technology to compete
effectively at the time,
providing no competitive
advantage to GM.
 GM’s business strategy

Other Japan
companies
Stage 4 (1970s-2000s):
d) Targeting specific
customer segments:
GM invested heavily in
vehicles with high brand
Trucks,
recognition and tailored to SUV
specific customer needs,
such as trucks and "macho"
exclusive SUVs.
 GM’s business strategy

Other Japan
companies
Stage 4 (1970s-2000s):

d) Targeting specific
customer segments:
-> However, the oil crisis
rendered these vehicles Trucks,
SUV
fuel-inefficient, leading to
their predicted failure.
Trucks,
SUV
 GM’s business strategy

Other Japan
companies
Stage 4 (1970s-2000s):

e) Pioneering new
technologies:
-> GM led the way by
constructing lithium-ion Electric vehicle
battery plants for electric battery

vehicles.
 GM’s business strategy

Other Japan
companies
Stage 4 (1970s-2000s):

e) Pioneering new
technologies:
-> However, by early 2009,
tangible successes were Electric vehicle
yet to be achieved as battery

lithium-ion battery
technology was still
underdeveloped.
 GM’S STRATEGIC
REORGANIZATION
NO DURATION STRUCTURE STRATEGY

Initially functioning as a holding company, GM

Original GM was initially a conglomerate of 25 aimed to cater to wealthy customers by offering
1
structure (1908) independent car companies a wide variety of expensive, custom-made
automobiles

each targeting different socioeconomic

Restructured GM into five major self-
1920s under
2 contained operating divisions: Chevrolet,
Alfred P. Sloan
Pontiac, Oldsmobile, Buick, and Cadillac
segments of the market, aimed to achieve both
superior efficiency and customer
responsiveness by embracing mass production
while catering to diverse customer needs

Streamline and decentralize its operations

Eliminate redundancy and increase the speed of
3 In the 1990s further and integrate its design and
product development.
manufacturing operations
 GM’S STRATEGIC REORGANIZATION
The control system also evolved with the creation of a new product design system to enable
strong management of vehicle programs and accelerate development

GM adopted the global matrix structure (as

shown in Exhibit 1) to manage its complex
international operations

The vertical axis of the matrix represents

the regional divisions and the financial
services division.
The horizontal axis encompasses the main
value chain activities.

The matrix structure allowed GM to operate

efficiently across different regions while
maintaining a focus on key business functions.
 Structure and Control Systems
Alignment with Strategy
NO STRATEGY CONTROL SYSTEMS

Sloan's reorganization of GM into

Each division was equipped with its own support
Decentralized divisional lines allowed each division
1 functions like sales, manufacturing, engineering, and
divisional structure to operate independently, focusing
finance
on specific market segments

making each division an independent Sloan incentivized divisional managers to improve

2 Profit center model
profit center efficiency and profitability

differentiating products across

Customer-centric capturing market segments overlooked by Ford,
divisions ensured that GM could
3 product aligning GM's product development strategy with
cater to various customer needs,
development market demand
from entry-level to luxury vehicles

The strategic restructuring and the alignment of its

structure and control systems with its corporate
Market dominance
4 Market dominance and expansion strategy enabled GM to dominate the U.S. car market
and expansion
from 1925 to 1975. GM's market share reached more
than 70% at its peak,
Thank you!
Assignment 2 - Group 1