New Strategy of Gm

New Strategy of Gm

  • Submitted By: cory90
  • Date Submitted: 04/26/2011 11:33 AM
  • Category: Business
  • Words: 2189
  • Page: 9
  • Views: 480


GM has suffered several decades of poor decisions that has led to its current $85 billion dollar loss of profit from 2005 through 2009. From unpopular cars to an excessive medical benefit plan for current and retired employees, GM faces a strategic issue of having a cost structure that is among the highest in the automotive industry. It has developed a strategy throughout its 100 years of business that is unique from its competitors, utilizing as many as eight divisions to produce approximately 60 models of vehicles in its product portfolio. With this unique strategy comes unique challenges, as developing competitive advantages in the automotive industry becomes increasingly difficult to execute using traditional methods. The integration of all global divisions is becoming a key to success in the industry, and is a work in progress for GM. Despite the challenges GM faces, CEO Rick Wagoner is optimistic its recent proposal to the Treasury Department for a $30 billion loan to restructure the company will once again place it in a profitable situation.

GM has a history of making long term decisions without considering the long term consequences, which are now quickly emerging as strategic issues that must be addressed and solved. The first of these strategic issues is restructuring the product strategy that has been a unique factor of GM in the past. At one time GM owned eight divisions that were marketed towards different segments of the population. These divisions included Chevrolet, Hummer, Cadillac, Buick, Pontiac, Saab, and others. Historically, these divisions have meant to be differentiated from its counterparts in such factors as sportiness (Pontiac), fuel efficiency and economy (Saturn), luxury (Cadillac), and so on. The challenge that this strategy has caused is a lack of the ability to create economies of scale. Because the divisions and many of the models within the divisions are so differentiated, virtually none of the parts,...

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