General Motors (GM) essay
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General Motors are normally known as GM is multinational automotive corporation, which is headquartered in Michigan. It is the largest company in terms of automotive vehicle unit sales. The company employs over 200000 employees and operates in around 157 countries in the world. Its process is operated in 31 countries and has a market segment for its product sales and services (Sloan, 1964 ).
All the market segments for the company ensure that there is an equal representation of its services in all the 157 countries. The company started its operations in 1909 whereby it was active for around 100 years before it collapsed. The main question in respect to its failure would be what happened to its financial management. The following issues may have contributed to its failure.
The company failed to satisfy the customer needs, i.e. the vehicles that the company offered to the market were not of any significant to the customers. This may have forced their existing potential customers, and the new ones to shy off buying their products. This led to a market share loss. As a result, they were not able to fight the power of its competitors in the market. The company had also largely lost its reputation. This is because of large factors that made it hard for it to innovate fast as other companies in the same market did. There were signs of bureaucracy in the industry, and as a result, the organization was capable to maintain the trend of a changing market (Corporation, 1983).
GM action of selling might also have facilitated to the loss of its market share in that it was one of the profitable financing businesses. It is clear that there were groups of customer who was loyal to GMAC. Therefore, they shifted with it to the other sector of the market with its sales.
The other problem with GM was that there was a halt in its profit making process. It is clear that all companies exist to make profits, and when they stop making profits, they eventually fail in the market. Profit is measured with an income statement. The income statement accommodates what a business has sold minus the cost of that business in that same period. This is gotten if sales are more than all costs and expenses. The company makes a profit that is the key goal of the business (Company, 2004).
For example, in the year 2005, GM stopped making profits with its loss of $90 billion in its first operational quarter, which was contributed to by increased fixed cost and a reduction in its sales. The company failed again to act first in order to cut cost, which would have meant cutting jobs or sending some of its employee’s home. GM had a problem of cutting cost, reason being that most of its cost was fixed. This meant that as their sales went down, the costs did not decrease. In other words, they had no chance of cutting back the production through layoffs, material purchase, and reduction among others. As a result, the company started making losses, which mounted and became so significant that the company could not survive a feasible business.
GM produced vehicles that were uncompetitive in the market. It is clear that GM car designs were poorly designed and built. Therefore, they took too long in the manufacture of these cars at extremely high costs. As a result, remarkably few people bought these vehicles leaving the company with surplus production aptitude. Competition ignorance among GM Company was another contributing factor towards its failure. This gave a chance to its competitors to take over the market share. It is also abundantly clear that GM focus was to make profits from finance, and so they took little attention in building better vehicles, which lacked innovation.
Poor management led to GM failure. The company managers got a promotion through a CEO toeing system and ignoring external changes. This gave the consumers an extremely negative picture while competitors acted well for those who were willing to buck for reasons behind promotions.
After its failure, there was a lot of government interference with an aim of reviving the company. The main reason was to create jobs after it collapsed. The company received financial support from the government. In spite of the fact that it was the main factor to its success, other factors such as the focus on wining back customers from its competitors. This was to be successful by making sure that the manufacture vehicles that are reliable. This is an essential move because GM has a poor image of shoddy cars as it derelict its cars in favor of high profitable trucks. According to the experts, customers will shun expensive repairs.
A rise in every vehicle gas millage with an introduction of electric vehicles is a necessary decision. The gas prices will remain volatile as they have a limited supply. However, the economy demand will rise. Therefore, far much success will be bestowed on the fact that all those vehicle brands that the company manufactures will be of an improved gas millage than those of their predecessors
The company grew and came up with new strategies on wining new young customers in their show rooms. This is extremely crucial as there is a likely hood of these people remaining with the same brand even in the future. This is a creative idea and a significant market strategy to win over its competitors. They also came up with good ideas that focused on doing good jobs with an anticipation of changing customer tastes. Finally, they managed to come up with innovative ideas that helped them adapt to changing trends (Weisberger, 1979). Decision making process in GM was made fast in order to be on the correct path with the marketing shifts.
In spite of the reason that the organization has been in operation for a long time, its failure acts as a condemnation of the overall American management styles. This failure highlights a clear and significant failure to the economy whenever finance becomes the way forward or the lead towards the economic success (Keller, 1989). GM aimed at making profits from finance and ignored other immensely influential factors in its success. In general, the company’s management was not capable to hold the key root towards the success of the company, which led its closure.
They failed to focus on the market trends, change, and constitute the relevant change. Therefore, GM’s failure status is a clear indication of what it is the fate of any company that only rests on its laurels and does not in any way adopts to change.