MGMT 480

Brenda Finger

Strategic Plan
Derek Davis Taylor Henrickson Jeff Vogel

4/30/2012

GM STRATEGIC PLAN

TABLE OF CONTENTS
TABLE OF CONTENTS..................................................................................................................................... 1 Introduction .................................................................................................................................................. 8 History Creation 1897-1909 .......................................................................................................................... 8 Acceleration 1910-1929 .................................................................................................................... 8 Emotion 1930-1959........................................................................................................................... 8 Revolution 1960-1079 ....................................................................................................................... 9 Globalization 1980-1999 ................................................................................................................... 9 Innovation and Challenges 2000-2008 ............................................................................................. 9 Rebirth 2009-Present ........................................................................................................................ 10 Mission/Vision & Major Goals .............................................................................................................. 10 Mission Statement ............................................................................................................................ 10 Vision Statement ............................................................................................................................... 10 Major Goals ........................................................................................................................................... 11 CEO of Company ................................................................................................................................... 11 SWOT Analysis....................................................................................................................................... 11 Strengths ........................................................................................................................................... 12 Weaknesses ...................................................................................................................................... 13 Opportunities .................................................................................................................................... 13 Threats .............................................................................................................................................. 14 8

Page |2 Redesign ................................................................................................................................................ 15 Industry Environment ................................................................................................................................. 17 Five Forces Model ................................................................................................................................. 17 Macroenvironment ............................................................................................................................... 17 Macroeconomic Forces ..................................................................................................................... 18 Demographic Forces ......................................................................................................................... 19 Political and Legal Forces .................................................................................................................. 19 Social Forces...................................................................................................................................... 20 Global Forces..................................................................................................................................... 20 Technological Forces ......................................................................................................................... 21 Strategic Groups.................................................................................................................................... 21 Industry Dynamic .................................................................................................................................. 22 Life Cycle Rebirth ............................................................................................................................... 23 Global Future ........................................................................................................................................ 24 National Context ................................................................................................................................... 24 Competitive Position ................................................................................................................................... 27 Competitive Advantage ........................................................................................................................ 27 Building Blocks ...................................................................................................................................... 28 Efficiency ........................................................................................................................................... 28 Quality ............................................................................................................................................... 29

GM STRATEGIC PLAN Innovation ......................................................................................................................................... 30 Responsiveness to Customers .......................................................................................................... 30 Distinctive Competencies...................................................................................................................... 31 The Role of Prior Strategies .............................................................................................................. 32 Strategies GM is Pursuing ................................................................................................................. 33 Barriers of Imitating GMs Distinctive Competencies ....................................................................... 33 Changing Industry Conditions ............................................................................................................... 34 Companys Ability ....................................................................................................................................... 35 Efficiency Enhancing Practices .............................................................................................................. 35 Quality-Enhancing Practices ................................................................................................................. 35 Innovation ............................................................................................................................................. 35 Responsiveness ..................................................................................................................................... 36 Competitive Position ............................................................................................................................. 37 Competitive Advantage Through Business-Level Strategy ......................................................................... 39 Differentiated........................................................................................................................................ 39 Market Segmentation ........................................................................................................................... 39 Distinctive Competencies...................................................................................................................... 40 Generic Business Model........................................................................................................................ 40 Advantages and Disadvantages of GMs Business Model .................................................................... 40 Strategic Group ..................................................................................................................................... 41

Page |4 Improving General Motors Business Model ........................................................................................ 41 Business-Level Strategy and the Industry Dynamic .................................................................................... 42 Industry Environment ........................................................................................................................... 42 Protect and Strengthen......................................................................................................................... 42 New Strategies ...................................................................................................................................... 43 Advantage in the Future ....................................................................................................................... 43 Strategy and Technology ............................................................................................................................ 45 Dominant Product Technology ............................................................................................................. 45 Technical Standards .............................................................................................................................. 45 Attributes of the Majority of Customers .............................................................................................. 46 Dominant Technology ........................................................................................................................... 47 Dominant Technology on the S-Curve .................................................................................................. 48 Intellectual Property ............................................................................................................................. 48 Strategy in the Global Environment............................................................................................................ 50 Value Creation....................................................................................................................................... 50 Responsiveness ..................................................................................................................................... 50 Cost Pressures ....................................................................................................................................... 51 Strategy ................................................................................................................................................. 51 Foreign market ...................................................................................................................................... 52 Corporate-Level Strategy ............................................................................................................................ 53

GM STRATEGIC PLAN Horizontal Integration Strategy ............................................................................................................ 53 Vertical Integration Strategy ................................................................................................................. 53 Increasing Profitability through Vertical Integration ............................................................................ 54 Outsourcing........................................................................................................................................... 55 Corporate-Level Strategy: Diversification .................................................................................................. 56 Restructuring strategy .......................................................................................................................... 56 Exited Industry ...................................................................................................................................... 56 Strategy to exit ...................................................................................................................................... 56 Opinion on exiting ................................................................................................................................. 57 Corporate Performance, Governance, & Business Ethics ........................................................................... 58 Stakeholder Groups .............................................................................................................................. 58 Performance of the CEO ....................................................................................................................... 59 Stockholder Perspective ................................................................................................................... 59 Employee Perspective ....................................................................................................................... 60 Customer Perspective ....................................................................................................................... 60 Supplier Perspective ......................................................................................................................... 61 Evaluation of the Perspectives.......................................................................................................... 62 Governance ........................................................................................................................................... 62 Board of Directors ............................................................................................................................. 62 Stock-Based Compensation .............................................................................................................. 63

Page |6 Financial Statements ......................................................................................................................... 63 Major Strategic Decision ....................................................................................................................... 64 Implementing Strategy Competing in a Single Industry .......................................................................... 65 Size of Business and Levels of Hierarchy .............................................................................................. 65 Authority and Responsibility ................................................................................................................. 65 Organizational Chart Divisional Structure........................................................................................... 66 Why Did GM Choose A Divisional Structure? ....................................................................................... 67 Integration ............................................................................................................................................ 67 Control Systems .................................................................................................................................... 68 Top Managements Role ....................................................................................................................... 68 Distinctive Competencies...................................................................................................................... 69 GMs Matrix Structure .......................................................................................................................... 69 GMs Culture ......................................................................................................................................... 69 Coordinating and Motivating ................................................................................................................ 70 Implementing Strategies in Competition Across Industries and Countries ................................................ 71 Multidivisional Structure....................................................................................................................... 71 Integration Mechanisms ....................................................................................................................... 71 Corporate-Level Strategy ...................................................................................................................... 71 International Strategy ........................................................................................................................... 72 Altering the companys structure ......................................................................................................... 73

GM STRATEGIC PLAN Particular entry mode ........................................................................................................................... 73 Use IT to coordinate.............................................................................................................................. 73 Multibusiness ........................................................................................................................................ 74 Conclusion & Recommendations ................................................................................................................ 75 References .................................................................................................................................................. 76 Appendix ..................................................................................................................................................... 83

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Introduction
History
Creation 1897-1909 General Motors has had a huge impact in the world of automotive design for more than 100 years. In the early 1900s, there were less than 8,000 automobiles in America. This would shortly change once General Motors started to make innovations in the automotive industry. General Motors was founded by William Billy Durant on September 16, 1908 (General Motors, 2012). Durant was previously known as one of the best horse-drawn vehicle manufacturers in Flint, Michigan. When General Motors was first created, it was only the Buick Motor Company, but within only a few years, GM would acquire more than 20 companies including Oldsmobile, Cadillac, and Pontiac (General Motors, 2012).

Acceleration 1910-1929 When demand for automobiles increased greatly in the 1920s, GM was the leader in production, design, and marketing innovation. They were a company that all other automobile manufacturers tried to keep up with, and in a lot of cases, other companys would even follow them and use their ideas. It was during his era in GMs history that they developed a philosophy when it came to making and selling cars. Their philosophy was a car for every purse and purpose. (General Motors, 2012) During this era, GM also began to become a worldwide company, opening more than a dozen new plants outside the United States. One milestone that was achieved during this era was the Cadillac LaSalle, it had curves throughout the body rather than sharp corners, it was one of the first sports cars and it made people look at cars as more than just a mode of transport (General Motors, 2012).

Emotion 1930-1959 During this era, a number of new innovations in the design of cars were made. Some of the major improvements that were made included: independent front wheel suspension unibody

GM STRATEGIC PLAN construction, and the one-piece steel roof. Cars that included these new innovations were: the Buick Roadmaster, the Chevrolet Corvetter, Chevrolet BelAir, and the Cadillac El Dorado.

Revolution 1960-1079 During the Revolution era, environmental concerns increased as prices and foreign competition led to a downsizing in vehicles. This was the largest reengineering program ever by the industry. This program brought in and age of lighter, more aerodynamic and more fuel-efficient vehicles (General Motors, 2012). This era also led to a couple of key innovations that are still used today. In 1971, GM created two engines that could run on low-lead or unleaded gasoline. Two years later, they introduced the airbag. Finally, in 1974, GM created the catalytic converter, which is an important step in reducing emissions (General Motors, 2012).

Globalization 1980-1999 The globalization era was the era in which GM began a series of reorganizations in North America which led to a single business unit there (General Motors, 2012). 1995 brought a milestone for GM; it was the first year in which annual sales exceeded three million units. Five million vehicles were sold in the U.S. that year. GM also formed NUMMI, a joint venture with Toyota and Saturn. They started focusing on making smaller cars and a new way of doing business. Along with creating a new line of smaller cars, there was also a truck boom which saw millions of families buy trucks and SUVs for their family vehicles (General Motors, 2012).

Innovation and Challenges 2000-2008 This era brought along one of the most innovative ideas that the automotive industry has ever seen. It was the idea for an electric car. In 2007, GM shook the industry with a concept car called the Chevy Volt, a vehicle that could drive on battery power for daily commuting, and then continue operating with a range extender when the batter was depleted (General Motors, 2012). The first Volts were sold in 2010. In 2008, things pulled a complete 180 for GM. A major recession and global credit

P a g e | 10 crisis drove car sales to near depression levels. GM was operating on very little cash and had even received a loan from the U.S. Treasury under that conditions that the company further accelerate a tough restructuring of its U.S. operations (General Motors, 2012).

Rebirth 2009-Present On June 1st 2009, GM filed for bankruptcy, and a new GM company was created. It took all of the strong assets of the old GM, and combined them with its new ideas. The new GM was smaller and leaner than it was before. It has only four brands in the U.S. and they were: Chevrolet, Buick, GMC, and Cadillac. The smaller GM has continued to grow and expand ever since its creation. More than 70 percent of sales now come from outside the U.S. in the markets of China, Brazil, the United Kingdom, and Germany (General Motors, 2012). After starting its new and improved company, GM has continued to be successful, this success has caused them to design, build, and sell the worlds best vehicles (General Motors, 2012).

Mission/Vision & Major Goals

Mission Statement When GM created their mission statement they wanted one that would stick in peoples minds. They came up with G.M. is a multinational corporation engaged in socially responsible operations, worldwide. It is dedicated to provide products and services of such quality that our customers will receive superior value while our employees and business partners will share in our success and our stock-holders will receive a sustained superior return on their investment (Quintela, 2011)

Vision Statement A vision statement defines what your company will do and why it will exist tomorrow. GMs vision statement is as follows: Over the past 100 years, GM has been a leader in the global automotive

GM STRATEGIC PLAN industry. And the next 100 years will be no different. GM is committed to leading the industry in alternative fuel propulsion (Quintela, 2011).

Major Goals
GM has one major goal in mind that it has been striving for, harder in the past few years than ever. That goal is to become a globalized company producing and selling its vehicles all over the world. They are hoping to have their units in many places that were one thought to be unnecessary. GM believes that if it can become more global that it will be more efficient and lower is overall costs, and will be better for the company in the years to come. (Gibson, 2009)

CEO of Company
The current CEO of General Motors is Daniel Akerson. It was a surprise to many considering Akerson had only been a member of the automakers board since July of 2009. It is also said that he is not a usual car guy. Some were worried about choosing him for the position just because of that fact that he is not a self-proclaimed car guy like many of the other CEOs in the automobile industry. He is no stranger to the CEO position of a company. Akerson has been CEO for three other companies. Although none of the other three companies were in heavy manufacturing, he does have other types of manufacturing experience. GM thought that his finance skills would be a big asset to the company and help them succeed. Akerson is GMs fourth CEO since May 2009 (Healey, 2010). GM had needed to make a change in their leadership. The company had already gone bankrupt because the former CEO did not have a good handle on the company or the economy. GM now needs someone who will increase sales and increase worker moral.

SWOT Analysis
According to Hill and Joness book, Strategic Management: An Integrated Approach, a SWOT analysis helps identify strategies to exploit external opportunities, counter threats, build on and protect company weaknesses, and eradicate weaknesses (SWOT Analysis and the Business Model, 2010). The

P a g e | 12 following table shows a SWOT analysis for General Motors, and following the table is a description of what each area of the analysis means for GM. Global experience Large market share Diversity of brand names Recovering automobile industry Environmental concerns Business process expansion Declining in market share Low worker morale Lack of leadership Competitors Rising fuel prices Health care costs

Figure 1.1- SWOT Analysis

Strengths General Motors has strengths that they have used that keep them going strong. According to other sources that have done in-depth analyses of their strengths, they are indicating that General Motors has a lot of global experience. GM has factories in Poland, Russia, South Ecuador, Egypt, Germany, as well as other countries (Marketing Teacher). Cyriac Thomas, who composed a document from the Amrita School of Business, mentions that GM is established as a global leader in the vehicle industry. The author also states that GM has been global for over a century (General Motors Strategic Analysis, 2008). Another strength that GM has is the large market share they have. According to a post on January 19, 2011, this large market share translates to the idea that the reason why General Motors has such a large market share is due to customer trustworthiness and their brand recognition (Business Review, 2011). General Motors also has many brand names that range from such brands such as Chevrolet, GMC, Buick, Pontiac, and Saturn. There are many more brand names that General Motors owns, which are listed in Thomass document. It is this brand recognition that assists in their large market share, as discussed above. The more brands that are recognized by their customers, the more the customers can

GM STRATEGIC PLAN trust that those vehicles will do well, which shows that the large market share and their numerous brands tends to go hand in hand.

Weaknesses Just as General Motors has many strengths going for them, they also have their fair share of weaknesses. As of January of 2011, General Motors is declining in market share. Business Review goes on to say that even though that GM is still number one in the market, their market share has been declining since 1984. In regards to their finances, it is pointed out that GM has insufficient liquidity, with their liquidity being $14 billion in 2008, and their liquidity in 2007 being $27.3 billion. General Motors is also having a bit of a problem with workers morale on the bottom line. According to a SWOT analysis provided by Chakar Rind, the author says that the lack of leadership in General Motors has brought down the workers morale (General Motors SWOT Analysis, 2010). According to employee reviews from people that have worked at GM, some of their cons or advice to senior management have to do with the managers that were directly over them. One reviewer said, Respect the people who work for you and need to make decisions on fairness rather than political reasons. Another reviewer said, Give focus on employee satisfaction their work life balance. upgrade infrastructure of office area have proper transparency at the time of recruitment (Glass Door, 2012). As it is seen on these reviews, this is a definite area that GM should be focusing on improving.

Opportunities GM also has opportunities that are waiting for them that they can use to their advantage. According to Business Review, the U.S. automobile industry is recovering, which is a good opportunity for GM to continue in a successful manner. Because GM happens to be the market leader, it is very important for them to continue to look for new customer needs so they can continually improve their vehicles.

P a g e | 14 Another opportunity that awaits GM is to continue being concerned about the environment. Many people are aware of how gas fumes tend to be a negative factor of the environment, so GM should continue being on the lookout for new ways to produce fuels to keep their cars running. GM is looking into this, but it is important to keep looking for energy efficient vehicles to put on the market, such as their very own Chevrolet Volt, which happened to have been named the North America Car of the Year. By continuing to be concerned about the environment, GM will continue to keep their brand image positive. In fact, there is a rising demand for hybrid vehicles, such as the Chevrolet Volt. The website, Marketing Teacher, lists six different cars that GM has been producing that are hybrids, and the website also goes on to say that they are looking into doing plug-in vehicles as well. This innovation that GM is pursuing is a good opportunity for GM to boost demand for GM products. In Chakars own SWOT analysis, he mentions that GM should be on the lookout for expansion of their business processes, while still keeping in mind on how their customers influence their business models. Having business processes that are up-to-date, and having processes that are promoting efficiency while keeping in check the environmental impact GM has on their customers as well as the environment itself is very important for GM, since they happen to be the market lead in the car industry. Threats Just like most companies, the threat of competitors is always going to be there, especially if those competitors have great leadership. For GM, their threat comes from intensive competition from overseas companies. Business Review mentions that a majority of the market is now shared by seven biggest automakers including Detroit Three and four overseas manufacturers. The presence of overseas automakers in top seven signals increasingly fierce competition and predictable threats to GMs position. Since GM has started reaching out to the global market, this is something that they will have to face as a company.

GM STRATEGIC PLAN Rising fuel prices is also another threat facing GM. According to Thomas, sales have drastically decreased due to the lack of fuel efficiency. The reason why sales have drastically decreased has something to do with GM being a large producer of trucks and SUVs (General Motors Strategic Analysis, 2008). The rise in fuel prices has created a larger opportunity for car-producing companies such as GM to highly consider creating vehicles that are not gas hogs. This goes back to the reason why GM has started producing hybrids. Not only is GM focusing on being environmentally safe, but this also shows that they are more concerned about decreasing sales. Healthcare costs, being as high as they are, tend to also be a threat to GM. The cost of healthcare for each vehicle that is produced by GM tends to be higher than those vehicles produced by GMs competitors (Business Review, 2011). Rind mentions the rising healthcare costs in his discussion of GM as well. He says that just like other major companies, GM has a quality employee healthcare benefit for those that work with them. Because they have been hit hard financially, it is hard to make sure that their health care benefit continues to be of great quality. Management should keep in check that the healthcare benefit that GM offers continues to be a great benefit and that employees are using their healthcare benefit to its extent. Having employees that are healthy and are using their benefits when they are needed are important to ensure that worker morale is going strong, and that leaders are making sure that employees have a healthcare benefit that can support worker morale and health.

Redesign
After analyzing GM using the SWOT analysis above, it is a concern that the main problem going on in GM has more to do with those who work within the company. Employees have low work morale, which is due to GMs poor leadership. The company needs to provide managers with sensitivity training. This training will offer managers to learn important skills they need in order to better relate to their employees. The training should also go beyond the scope of the sessions provided by the training. Employees should have a stronger voice within the walls instead of having to report to an external blog

P a g e | 16 such as Glass Door that top executives are only able to review. By providing an internal blog for employees to write on, top executives will have a better understanding of what is going on with other areas of the company. It would be beneficial for those leaders to gain more experience in working with a diverse set of employees, which can be done by shifting managers from different areas so they can experience working with different employees. The employees should also be provided with the same sensitivity training as well. Employees who work under these particular leaders should receive nearly the same treatment that their leaders are getting, but more focused at their own levels. By providing the training and the external blog to report, GM can do much better in many more areas of the company. When this redesign goes into effect, employees will be able to more effectively communicate with coworkers, and more importantly, their managers. In the perspective of the

managers, they will have a stronger interpersonal relationship with the employees they supervise and are then able to more effectively supervise and work with their employees.

GM STRATEGIC PLAN

Industry Environment
Five Forces Model
There are five forces in the book that shape the competition within the industry, they include: (1) the risk of entry by potential competitors, (2) the intensity of rivalry among established companies within an industry, (3) the bargaining power of buyers, (4) the bargaining power of suppliers, and (5) the closeness of substitutes to an industrys products. All of these will play a role in GMs redesign as the leadership should do a better job of improving all of them. GM should always be thinking of ways to improve their company and all of these risks listed should be thought of before they happen. (Hill & Jones, 2008) Most of these are present in the manufacturing industry in which GM is involved in. The two that are least present would be the bargaining power of buyers, and the bargaining power of suppliers. The risk of entry started in the 70s when the price of oil quadrupled and Detroits Big Three car companies struggled to meet the demands of the American people. Japanese automakers prevailed through this time and it was the first time Americans started choosing foreign vehicles over ones manufactured in the U.S. This also goes with the second, the intensity of rivalry among established companies within an industry, because now there are many established automakers selling cars in the U.S. The last force that GM has room to improve on would be the closeness of substitutes to an industrys products. Other companies have made changes in the industry to make their vehicles powered more by electricity than by gasoline which in my opinion would be a substitute. (Brown, 2011)

Macroenvironment
As indicated in the SWOT analysis, a few areas in the macroenvironment were noted. These areas include macroeconomic forces, demographic forces, political and legal forces, social forces, global forces, and technological forces.

P a g e | 18 Macroeconomic Forces The economy was not doing well for a few years, and it especially affected the automotive industry. As mentioned previously, GM filed for bankruptcy in June of 2009. The following graph shows the annual percentage state GDP in automotive manufacturing:

Figure 2.1 - Average Percentage of State GDP in Automotive Manufacturing, 1998 to 2008 (Thompson, 2010)

As can be seen in the graph provided above, less than 1% makes up the majority of the states that make up the automotive industry in each states particular economy. It is evident that the automotive industry tends to make up more in the eastern states. The next graph shows the percentage of automotive employment manufacturing in automotive parts manufacturing:

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Figure 2.2 Percentage of Automotive Employment Manufacturing in Automotive Parts Manufacturing (Thompson, 2010)

GM STRATEGIC PLAN As is seen in this particular figure, the two dominating percentages are 21 states that have a 50% to 74.9% range of employment manufacturing in automotive parts, and 17 states are in the range of 75% to 100%. These states show the importance of having employees in the manufacturing parts segment of the automotive industry.

Demographic Forces The baby boomer generation is aging quickly, and the time for them to retire is climbing up to 5% annually. However, at the same time, the number of drivers aged from 16 to 29 is increasing, and most of these young adults are postponing getting their drivers licenses (Investing Thesis, 2010). This is going to be affecting the automotive industry because those young adults are affecting the purchase of vehicles. However, The median age of the U.S. vehicle fleet is a record 9.4 years, with nearly half of the 250 million cars & trucks on the road at least 10 years old. Historically, nearly 6% of the U.S. fleet is replaced each year, with an additional 3 million units coming from new buyers. (Investing Thesis, 2010). These new buyers are assisting with the strength of the automotive industry, which shows that the people who are buying those vehicles are providing the automotive companies such as GM to continue to provide quality vehicles for young adults.

Political and Legal Forces It is very important for the government to ensure that the automotive industry keeps the law when it comes to doing things such as dealership, auto manufacturing, repair, maintenance, recycling, and sales. The U.S. Small Business Administrations website has information in regards to vehicle import regulations, import requirements for vehicles, engines, and equipment; and documents that discuss emissions standards. Other standards that are important to the automotive industry are fuel economy and safety standards (Automotive, 2012). As can be seen by the numerous resources provided by the

P a g e | 20 U.S. Small Business Administrations website, the automotive industry needs to follow a set of legal regulations to ensure that their vehicles are following standards when it comes to manufacturing and sales of vehicles.

Social Forces It is important for employees to work in an environment that provides safety and respect. Rind mentioned that the low worker morale was brought by the lack of leadership. The employee reviewers who posted on the website, Glass Door, mentioned that they did not feel very well respected and a need to focus on the people that work there instead of office politics. Another reviewer had mentioned that workers should feel satisfied with the work they do. A cause of that may be how their managers are approaching them when it comes to the appraisal process. When the working environment improves and more studies are done in the larger perspective of organizational behavior, it shall become clearer to GM so that they can focus on improving worker morale.

Global Forces It was recognized as part of the SWOT analysis as an opportunity for General Motors to make sure that they are protecting the environment and it is definite that General Motors does indeed care about the environment. Gas fumes tend to pollute the air, and General Motors and BMW are

collaborating on fuel cells so that the environment can be much cleaner. In an article posted on December 12 of 2011, GM spent more than $1.6 billion developing their first sell technology thus far (Yvkoff, 2011). They have partnered with BMW so that they can bring hydrogen fuels to the mass market by 2015. However, the Obama Administration wants to end the hydrogen fuel cell vehicles program. Obviously, those who are for hydrogen fuel are seeing hydrogen fuel as the ultimate clean-car technology. The reasons against the Obama Administration wanting to end it are because of a decision by the Energy Secretary, Steven Chu. Chu stated, cost and durability of vehicle cells, the inability to store large volumes of hydrogen fuel, the absence of a carbon-free way of generating the hydrogen, and

GM STRATEGIC PLAN the need to build a nationwide refueling infrastructure (Service, 2009, p. 1258). Unless these researchers can prove the Obama Administration otherwise, GM needs to pursue different strategies for being environmentally friendly.

Technological Forces Technology is always a big macroenvironmental concern for all organizations. One of the technological gains that GM has used over time has been OnStar. GM partnered with OnStar

Technology so that their customers can see that GM cares for the safety of their customers. However, according to an editorial submitted by Paul Milo in May 2011, it is relatively easy to hack the system. Researchers at the University of California utilized OnStar to take control of a number of functions in the vehicles they used (Milo, 2011). They were able to simply by breaking through the authentication system. In order to gain access to the car, they made about 130 calls and then uploaded code using 14 seconds of audio. Because this opens the door to illegal activity to hackers, GM should be on the lookout to different services that have more of a sophisticated system. The employees that work with the technology especially should look into doing further research on a more sophisticated system. As a part of their training in worker morale, leadership, and communication, this particular situation can be brought up and foster a strong team environment so that all levels of management and employees can work together to create something that could really benefit the technological side of General Motors.

Strategic Groups
In the automotive industry, there is competition across many automotive companies. The competition basically is which company can provide vehicles that are easy to afford and have great quality. Figure 1.1 below shows a strategic group map in the automotive industry.

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Figure 2.3 - Strategic Group Map 1 (Alfanzo, 2007)

According to the figure above, GM is located towards the medium in regards to price and quality, and falls above the product line diversification line at full mass production. This shows that the company is doing well in regards to their production, and has relatively good prices in regards to their vehicles. Though production, price, and quality are all good factors when it comes to business, making sure that employers are not being overworked and experiencing stress at work does not happen.

Industry Dynamic
There is evidence that innovation is reshaping the automobile industry. One of the biggest innovations in the car industry over the past few years is the hybrid cars. When they first came out, they were expensive and not many people could justify purchasing one with their price tag. The car industry quickly became aware of this and found ways to make their cars cheaper and easier for more people to afford. GM was one of the first automakers to make a hybrid in the way that the gas powered motor does not drive the rear tires; it is used to keep the lithium-ion battery pack charged. A survey done in 2006 by the influential J.D. Power and Associates indicated that 57 percent of respondents would consider buying a hybrid car for their next vehicle. In 2006, hybrids only made up one percent of the market but are expected to become more popular as the price of gas continues to increase (Motavalli, 2007).

GM STRATEGIC PLAN GM could use some innovation in the manufacturing plants to their advantage. Although they have introduced things like robot welders there is always room for innovation to decrease the cost of making vehicles. This can be a dangerous part of managing the company because the CEO will not want to give the wrong idea to employees that their jobs may be in jeopardy.

Life Cycle Rebirth

After filing for bankruptcy on June 1, 2009, General Motors Company had to start over and get their business back on its feet. When GM reformed itself after the bankruptcy, it kept all of the strongest assets from the old company, and implemented them into the new company along with all of the new and improved ideas. On July 10th, 2009, the new GM was created with the U.S. Treasury, Canadian Governments, and the UAW Retiree Medical Benefit Trust as its major shareholders (General Motors, 2012). The new GM was smaller and leaner than the old GM. The newly formed company was comprised of only four brands in the U.S. They were: Chevrolet, Buick, GMC, and Cadillac. The network of dealers was also slimmed down to be more efficient. It slimmed down to 4,500 dealers. Although, GM is getting smaller and more efficient in the U.S., they are still continuing to grow exponentially globally. More than 70 percent of its sales now come from overseas. The top five markets by sales are now China, the United States, Brazil, the United Kingdom, and Germany. General Motors has been through some tough times in the last few years with having to file for bankruptcy, but the company just would not quit. GM got back on its feet and became more powerful than ever. Sales in the U.S. are climbing and the sales overseas are also increasing, making GM one of the leaders of the automotive industry, and they will likely be on top for a long time due to their passion, design, innovation, and build. The biggest thing that GM can do to help their continued rise back to the top is by redesigning their customer support system. In the past, before they went bankrupt, GM treated their customers

P a g e | 24 very poorly and this caused them to lose a very large number of customers, which also caused them to lose money and eventually end up bankrupt. So in order for GM to be successful, they must focus their new efforts on keeping their customers happy by being responsive, helpful, and giving back to them. If GM does these things, the customers will be much more loyal to GM in the future.

Global Future
The automobile industry is in fact a global industry. As the world trend change, automobiles are introduced to more people all the time. The one global trend that seems to be happening more than any other is fuel efficiency. Technologies that were once used to achieve the most horsepower in its class are now being focused more towards fuel economy. If an automobile is planning on selling its product anywhere in the world today a strong selling point will be its good fuel efficiency. As far as GM being a global automaker, this is one of their biggest goals. They already have locations in Brazil, China, and Russia. Part of their plan to globalize also included consolidation. GM eliminated 300 applications in 2008 hoping to reduce the overhead cost and become more streamline in certain products. With all of this ambition towards getting plants going in other countries GM should have let their current employees know if they should be concerned about losing their jobs. If the employees think layoffs are coming, chances are they have already begun a search for a new job and are not happy with the current situation (Economist, 2008).

National Context
There have been battles between brands since the beginning of time. Whether it is Coke vs. Pepsi, or Nike vs. Adidas, each of these brands is trying to be the best in their industry. This is no different in the war between General Motors and Ford Motors. GM and Ford have been rivaling each other for over 100 years now, ever since cars were invented, each company having new ideas and innovations that will help them be the best automotive company in the United States.

GM STRATEGIC PLAN When comparing these two automotive giants, there are three things that are compared: annual profit, market capitalization, and the U.S. market share. Customers are what give a company an advantage in these segments of a business, without customers, a company will die and they will not be successful in any of these three things. At the moment, the two companies are in a battle over market share. The company that has the strongest leadership will likely have the advantage in market share. When a company has a strong leader, the workers will work harder to please him or her; having a strong leader also causes customers to trust the company more, and makes them more willing to spend their money at that company opposed to the other. GM needs a strong leader to make sure that they redesign their customer support. The only way to have a large number or loyal customers is to have a strong leader, which in turn will create a strong, trustworthy business. GM is currently in the lead but analysts are divided on who is the actual winner (III, 2011). Over the last Century, these two companies have gone back and forth controlling the automotive industry in the United States. Ford held the lead until the late 1920s when the Model T lost its popularity, after that they fell permanently behind GM. GM held this lead until they began to skid into bankruptcy in 2009 (III, 2011). Since GM created its newer, leaner company, they have become a fighting machine. Using ideas from the old company and combining them with new, innovative ideas behind the new CEO, Dan Akerson. At the moment, Ford holds a small advantage in annual profits at $6.6 billion in 2010, compared to GMs $6.2 billion in 2010. A larger lead is held by Ford in market cap, Ford was at $55 billion to GMs $50 billion in 2010 (III, 2011). The U.S. market share however, has been much closer. GM had a commanding lead at the end of 2010, but since then Ford has begun to battle back, almost catching up to GM, but GM still remains at the top. According to Alex Taylor IIIs article titled GM vs. Ford: The Hundred-Year War, most observers expect GM to stay ahead of Ford in overall share for the rest of this year. It is getting a big lift from the

P a g e | 26 new cars they have unveiled. Another factor is that because of the rising oil prices, Ford will struggle with selling their trucks, something that they have been beating GM in for years (III, 2011). Overall, these two brands are clearly the front runners in the United States. They have been going back and forth in the lead for dominance, and will likely continue to do so for the rest of time. As of right now, GM is still the dominant company and according to analysts, they will remain that way for a while. So if you are looking for the most popular, most dependable brand, go with General Motors.

GM STRATEGIC PLAN

Competitive Position
Competitive Advantage
As stated before, General Motors (GM) is in the automobile industry. For 104 years, the company has focused their company on the production of vehicles, starting in 1911 with a colossal sixcylinder, $2,500 beast (Titanic, 2009). Since then, they have competed with many automobile

companies, including companies that no longer exist, such as Acme, Berkshire, Chrysler, and Ford, just to name a few. When GM started out, they had a competitive advantage over these companies. Some companies that started around the same time that GM started are no longer, but GM lasted as long as they have because they had vertical integration with Fisher, causing GM to coordinate management of inventories, production and purchasing given transportation, communications and data processing costs at that particular point in time (Casadesus-Masanell & Spulber, 1999). Today, GM still has competitive advantage over their competitors. Chrysler and Ford still exist, but GMs competitive advantage at that time has changed. In 2011, GM and the United Auto Workers pledged together to make GM competitive. In Krebs article written in 2011, Dan Akerson says, We want the new GM to succeed and when it does, everyone will benefit. We are playing to win, and were counting on our workforce -- hourly and salaried -- to take on the challenges together and forge new partnerships as a competitive advantage (GM and UAW Launch 2011 Contract Talks, 2011). Keeping in mind that GMs workers are facing a low morale, it may partly be due to these challenges to the workforce that could be causing the low morale facing GMs workforce, even though forging new partnerships is a competitive advantage for GM. Although some things in regards to staying competitive are great, such as forging partnerships as mentioned earlier, other things may be the cause for GMs low worker morale. According to Paul Gregorys article in 2011, it is stated, the new GM appears to be doing a lot of things right. It has

P a g e | 28 reduced its labor force from 263,000 to 208,000. It operates fewer plants. It made slightly more cars, and it has reduced its buyer incentives (Gregory, 2011). The item to look at in regards to what GM is doing right is the labor force reduction. While it may keep GM going strong in 2011 and in 2012, it might not be helping with the worker morale. Workers are worried about if they are going to be losing their jobs, just to keep GM competitive. Though competition is good for companies life, competition should not override the importance of having low worker morale. In the training program that will be offered to management and to employees, making sure that healthy competition and balancing worker morale needs to be the focus for all activities done in the program. As employers focus on being ethical decision makers and working in a team environment that offers competition in a healthy manner, the perspective they have should start showing in other areas of work, therefore creating more competitive advantage within the company walls and also with competitive advantage in terms of which company to work for.

Building Blocks
The redesign that is taking place at General Motors will focus on two of the four building blocks, quality and responsiveness to customers. The main goal of the redesign is to care more for their customers so that they will be happier and more loyal. Loyalty will help them bring in money year after year when customers come back for more of their products. When more people are loyal to a business, it helps add to the quality of that business in the eyes of other people. When other people see this, they may be persuaded to become a customer of GM. The responsiveness to customers building block speaks for itself on the redesign, being more responsive to the customers is what GM needs to achieve to be the most successful business that it can be.

Efficiency The General Motors Plant in Lansing, Michigan has an energy intensity that is 18 percent lower than the industry average, because of this; they have received an EPA Energy Star Certification (Basel,

GM STRATEGIC PLAN 2011). The Lansing Company is the first GM Company from the United States to receive and Energy Star Certification for superior energy efficiency from the U.S. Environmental Protection Agency. In order to receive this award, the plant had to perform in the top 25 percent of similar facilities nationwide. This facility is the place responsible for building the Buick Enclave, GMC Acadia, and Chevrolet Traverse. To achieve this award it must: Designed the plant to meet LEED Gold standard for energy efficiency in heating, ventilation, and air conditioning without using steam. Integrates energy management into monthly performance scorecards. Uses efficient lighting and daylight harvesting to conserve energy. Monitors hourly energy use and plant controls to keep non-production energy to a minimum. Engages employees to think green through an energy quality suggestion program (Basel, 2011). Energy Star was introduced by EPA in 1992 as a voluntary, market-based partnership to reduce greenhouse gas emissions through energy efficiency (Basel, 2011). Today, the Energy Star label can be found more than 60 products as well as new homes and commercial and industrial buildings that meet energy-efficiency specifications set by the EPA.

Quality Quality and Safety are the most important things at GM. GM has used their new technology to make their cars safer and more dependable than ever. One of the things that GM has done to add safety and quality to their vehicles is add OnStar. OnStar is a subscription based in-vehicle security, hands-free calling, turn-by-turn navigation, and remote diagnostics system that is installed in their vehicles (Motors, 2012). This adds to the quality of the vehicle because it makes it more trustworthy. For example, if someone were to get in an accident, OnStar would notify the police and ambulances of your crash and send you help, even if you were unconscious. GM also uses a wind tunnel to help them engineer a vehicle that is more efficient and has less wind noise. By reducing wind noise the car sounds much more

P a g e | 30 solid, adding to the quality of the vehicles. GM also uses what they call Glidepath. This is a testing system that puts several hundred thousand miles on new models throughout the design and development process (Motors, 2012). StabiliTrak also helps GMs vehicles in the quest to be a quality product. StabiliTrak is a system in the vehicles that helps in low-traction conditions like ice, snow, gravel, wet pavement, and uneven road surfaces. StabiliTrak is proven to help reduce single vehicle crashes (Motors, 2012).

Innovation General Motors has always been driven by bold imagination and focused, disciplined action to realize the power of those ideas. The people at GM are designing cars that most people do not think are even possible, everything they do is in the future. GM is looking into the future to a time where cars no longer pollute; when they use only fuels made from renewable sources or run on electricity (Motors, 2012). One of the things that GM is looking in to is autonomous driving, a car that can drive itself. GM says that this technology is actually closer than people think. According to GMs website, they expect semi-autonomous vehicles to be available to customers by the end of this decade, and for fully autonomous vehicles to be available in the next decade. Some of the technologies that GM has already introduced are things like active park assist, adaptive cruise control, and side blind zone warning (Motors, 2012). These technologies make it easier for people to do everyday tasks in their vehicles.

Responsiveness to Customers Customer responsiveness is what GM is trying hardest to improve, and when the redesign is complete, it is certain that GM will treat its customers with the respect and care that they deserve. In the past they have had a lot of trouble with this area and it has caused them to have to lay off thousands of employees, and even go bankrupt. One thing that GM has done to try to solve this problem is hire a

GM STRATEGIC PLAN new Customer Service agent. Her name is Alicia Boler-Davis (Staff, 2012). North American GM President Mark Reuss says The breakthrough change that Alicia led as plant manager at Orion Assembly, while launching the all-new Chevy Sonic and Buick Verano, needs to be brought to our customer experience. What I admire about her is her candor with leaders and strength of commitment she engenders among her team (Staff, 2012, p. 1).

Distinctive Competencies
GM has many competencies that keep them running smoothly and at a competitive advantage. The core competency GM has is their innovation. This is the driving force behind the companys $190 above turnover. Since GMs start in 1908, they have always been an innovative automobile company, and will most likely remain an innovative automobile company (Thomas C. , 2008). As GM continues to add new and emerging technologies to their products, they will continue to be innovative. Just as GM strives to be innovative with their vehicles, they should also be innovative with the training sessions that will be provided to their managers and employees. Instead of merely lecturing, the training should have a variety of technologies and methods for making the company much more competitive and, at the same time, creating a working environment that allows for competition along with teamwork, ethical behavior, and allowing for many diverse opinions without the threat of feeling their job would be in jeopardy or feeling uncomfortable. Another competency that GM has which helps them with their advantage is their reliability of their vehicles. One can tell the difference between a Toyota and a GM car because Toyotas have more defects than a vehicle produced by General Motors (McGraw-Hill Higher Education, 2006). Because GM has vehicles that are reliable, it makes customers happy and willing to buy more vehicles produced by GM in the future.

P a g e | 32 The Role of Prior Strategies As mentioned previously, GM is competitive in the sense that they have been innovative since their start. GM looks for new ways to be innovative in their vehicles, especially in design and

technology. According to their website, Our engineers, designers, and planners live years in the future, imagining a future where cars carrying our loved ones never crash; where empty cars can be sent to pick up our friends; and where cars dont break down, leaving us stranded (Emerging Technology: Driving Safety, Efficiency and Independence, 2012). The website lists the ways that they are innovative in design and technology: Autonomous Driving: Reducing Accidents and Increasing Independence Electric Vehicles (EV): Fully Electric, Emission-Free Driving Hydrogen Fuel Cells: Reducing Dependence on Gasoline Mobile Applications: Keeping you Connected It is because of these designs and technology that helps explain GMs competency in regards to reliability. Without these things, GM vehicles would not be as reliable as a Toyota; in fact, if they did not have those designs and technological pieces, Toyota would be more reliable than General Motors, and would have an advantage over GM. Things do not change just by watching and observing managers at work, especially when managers are doing their best to make changes for the better. In many corporate strategies, companies have had the mentality that employees will reflect the behavior of their general managers, and that will create change all over the company, but this isnt how behavior modification works at all. General Motors does throw events for their employees from time to time, but even these events only go so far to help with worker morale. Considering that company events and observation can only help morale at a limited level, General Motors should be finding out what their employers are wanting from their company and use that to the advantage of the employees so that they boost the worker morale.

GM STRATEGIC PLAN Strategies GM is Pursuing General Motors has been on a successful rise because of its competitive advantage. They are using the power of their brand name, and the fact that they are a global company also helps them tremendously. General Motors is using its Chinese partner Shanghai Automobile Industry Corporation (SAIC) across geographies to successfully compete in markets where it would struggle to do so alone (Hodges & Russo, 2010). GM has also leveraged its partnership with Daewoo; this has made it possible for GM to introduce a lower-priced Chevrolet branded vehicles to China through its partnership with SAIC. By redesigning their customer support section of their business, GM will only add to their competitive advantage over the other companies. GM is already the top vehicle manufacturer, and thats without this redesign, so after they start treating their customers right and make sure they are happy, GM will be an unstoppable force in the world of automotive manufacturing. Barriers of Imitating GMs Distinctive Competencies One of the distinctive competencies GM has is their innovation. GM is the first car company to make a vehicle that functions with a fuel powered engine only to charge its battery packs, not to power the tires of the vehicle resulting in overall better efficiency. They are not afraid to try something new and be the first in the car industry to come out with a different type of product. If GM did not have new innovations they would not be in business today. Before its bankruptcy GM had started some focus on crossover vehicles or vehicles that combine features of sedans, vans, and sport utility vehicles. GMs vice president at the time, Jay Wetzel, thought that this was the fastest growing trend in the market and that GM should pursue it. Because GM was thinking ahead and realizing that people are spending more time in their vehicles they were one of the first to introduce this type of crossover vehicles. There is no way to stop another company from making a crossover vehicle like this but because GM was one of the first to realize this trend and market their product it created a barrier that the other car companies will have to take down to sell their vehicles (Maloney, 1999).

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Changing Industry Conditions

There is evidence that GM has had difficulty adapting to the changing industry compared to other car companies. In the 1980s the chairman at that time, Roger Smith, invested in robots and automation. Smith also started two new adventures, NUMMI with Toyota, and CAMI with Suzuki. These plants were supposed to teach GM about lean manufacturing. GM did not take their information and use it like they should have. When GMs senior engineers and product developers returned to Michigan to explain what they have learned from the others and make suggestions the type of responses that they got were We dont do that here, so go sit in the corner, said Joseph Phillipi, a long time industry analyst (Brown, 2011). If GM had used this information correctly they may have been able to significantly reduce the cost it takes to make every vehicle. The employees may not be happy with how GM is currently manufacturing their vehicles. If the leadership in GM will not listen to their employees and try to keep them happy low moral occurs in the company, which is currently the situation GM is having.

GM STRATEGIC PLAN

Companys Ability
Efficiency Enhancing Practices
After filing for bankruptcy efficiency is one of the biggest things GM should improve to boost sales, and become more profitable. The company has plans to reduce some of its overhead costs and concentrate on certain models of vehicles while cutting other models from production. Fritz Henderson was the CEO at the time GM was working toward becoming more efficient. Henderson decided it would be best for GM to reduce the scale of its operations in the US. GM has stopped the production of certain models and is still looking for a buyer for the Hummer and investors for its European operations (Automotive Engineer, 2009).

Quality-Enhancing Practices
In 2005, GM manufacturing facilities won first place awards for quality products. GM led the list of award recipients done by Power and Associates Initial Quality Study. GM took the top three spots for manufacturing plants in North and South America. Some of GMs brands that performed very well in the survey were Buick, Cadillac, and Hummer. This was the fourth year in a row that GM was in at least the top two plant awards in North and South America (Advanced Materials & Processes, 2005). GM employees may have been happy at this point in time in order for GM to win awards like this, but when the company is in jeopardy, people worry. GM management at the time could have kept implementing these techniques to all of their plants to increase worker moral in the whole company.

Innovation
One of the distinctive competencies mentioned earlier was GMs innovation. In fact, innovation is GMs core competency. It is that innovation that is the reason behind their $180 turnover. When it comes to their vehicles, GM differentiates its products and charges a high price for those vehicles. The table below presents price data on several Toyota vehicles and their prices, compared to the GM Chevrolet vehicles.

P a g e | 36 Toyota Prius (Toyota, 2012) Prius 2 $24,000 2012 Cruz $16,800 Prius 3 $25,565 2012 Malibu $22,110 Prius 4 $28,235 2012 Corvette Coupe $49,600 Prius 5 $29,805 2012 Avalanche $36,800

GM Chevrolet (General Motors, 2012)

Figure 4.1 Comparing Price data on the Toyota Prius vs. the GM Chevrolet

The data above supports the fact that their products happen to have a relatively high and low price when it comes to vehicles. As you can see, the range in regards to the Toyota Prius come to $24,000 to $29,805, while the GM Chevrolets range runs from a relatively inexpensive $16,800 to a $49,600. As seen on GMs official website, the design and technology may be playing a role in their innovation and their prices. Because GM strives to have current design and technology in their vehicles, it is of no wonder that the prices fall in that particular range, even with their most current vehicles. In addition, taking into account that GM is environmentally aware and that they want to produce vehicles that are of high quality and safety, this also comes at a high cost to the GM consumer. Without these prices, GM would not be successful and without keeping their innovative factors going, they would not be producing excellent vehicles.

Responsiveness
General Motors went through a very tough time in 2009 when they went bankrupt. The cause of this bankruptcy was because the managers at the time were not doing a very good job. Their lack of leadership skills caused GM to have to get rid of thousands of employees, which caused their reputation in the eyes of the public to take a big hit. People thought of GM as being a company that lacked caring about their employees or their customers, which caused their sales to drop significantly, and ultimately go bankrupt. What GM is trying to do now is completely start over by taking the things that the old GM did well, and incorporate them into an entirely new system that strived to be the best company they could

GM STRATEGIC PLAN be. One of the things that they are doing differently now is there are paying more attention to what the customers want. New management saw that this was one of the big reasons that GM went bankrupt in 2009 so that was something that needed to be changed. GM needs to focus on their customers and keep them happy. Without customers, GM would be nothing, so they need to make sure the customers get everything they want and more, and this includes things like respect, honesty, loyalty, and care. Another thing they are doing is trying to be even more innovative than before, putting out newer cars and technology all the time, and looking at their ideas as being limitless and having anything be possible. As mentioned previously, GM is working on an autonomous car, which is a car that drives by itself; they believe that a semi-autonomous car will be available by the end of this decade, and that the fully autonomous version will be available in the next decade. Along with having these futuristic ideas, they have also already released new technology that was previously thought too far from our time, such as active park assist, adaptive cruise control, and side blind zone warning (Motors, 2012).

Competitive Position
GM is still making their way back on top of the automobile industry by being innovative and responsive to their customers, as evidenced in the information provided above. GM vehicles are doing well because GM is innovative with their products and that they have a distinctive price advantage over other vehicle companies. GMs financial record during the 2011 fiscal year also shows that they are doing well competitively. Browns article states that a year after GMs bankruptcy, the company is doing better than before. In the 2011 fiscal year, GM produced $1.7 billion in profits, making that particular quarter quite successful (Under the Hood at GM, 2011). It looks like now that the company is rebuilding themselves with their finances that they might be able to do well competitively against their competitors. However, the question still lies if GM can be competitive with other companies so that they do not lose their workers to other companies. If they focus too much on being competitive with their competitors in regards to innovative products, they may

P a g e | 38 be losing some of their best workers, causing the already low morale to go even deeper. If GM continues to be competitive in their market while making sure their employees are being productive, have a healthy work environment, and enjoy the work they do, then GM will be able to strive and live through another great fiscal year like the one they had in 2011.

GM STRATEGIC PLAN

Competitive Advantage Through Business-Level Strategy

Differentiated
Part of being a successful business is making sure that your product or service is different from everyone elses. By different, they mean better. When a product or service is different, they want it to be better than the others so that they will be ahead of the other companies. GM stays differentiated from other vehicle manufacturers by being innovative. They are always working to stay ahead of the game and come out with the latest and greatest products. In fact, GM is currently working on a car that can drive and park all on its own. They also believe that there will be a semi-autonomous car by the end of this decade (General Motors, 2012). Some of the things that GM has already added to stay differentiated from its competitors are: adaptive cruise control, side blind zone warnings, and Automatic Park assist (General Motors, 2012). These innovations are part of why GM is the industry leader in sales. GMs newest technology that they are working on is the Chevrolet EN-V (Electric NetworkedVehicle). It is a short range, low speed vehicle that can drive on its own, avoid crashes, and even park itself. It is also a fully electric vehicle, so it has zero emissions, making it very healthy for the environment (General Motors, 2012). The Chevrolet EN-V is expected to be available in 2013.

Market Segmentation
GM has changed its market segmentation, they used to have too many models of cars, too many duplicates, and they lacked a product policy. GM reduced the number of cars they had on their line and separated them by price grades, and emphasized individual brand image to entice customers (Daye, 2007). Another thing that GM has done is use price segmentation. They have separated Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac. They separated them by price and by status, and they clearly define a spectrum to appeal to successively higher income groups (Thomas J. W., 2007).

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Distinctive Competencies
When it comes to GM, efficiency, quality, and innovation are huge driving factors behind their success. They have always been very efficient in the way they produce their cars, making them trustworthy in how quick they can produce new cars. The quality factor has been with GM since the beginning. Their vehicles have always been safe and trustworthy, quality and safety are at the top of the agenda at GM (General Motors, 2012). The redesign of GM needs to improve on is their responsiveness to customers, the lack of responsiveness is what got them in trouble in the first place, and eventually led to GM going bankrupt. GM needs to treat its customers with respect and loyalty if they want to keep them and if they want to add new customers. People like being treated like the business cares, so by showing its customers that they really do in fact care, GM can take its advantage over their competitors even further.

Generic Business Model

GM is changing their business model so that they will be more responsive to its customers. The steps involved in finding a business model include: (1) customer needs, or what is to be satisfied; (2) customer groups, or who is to be satisfied; and (3) distinctive competencies, or how customer needs are to be satisfied. By going over all of these, GM decided that because they went bankrupt, they should probably change something about their business model. So they re-staffed and are now focusing on being more attentive to their customers and doing more things to make sure the customers are always happy.

Advantages and Disadvantages of GMs Business Model

The main advantage to the redesign that GM has pursued is that by making the customers happy, it will likely keep them loyal, which means they will continue to make money, and money is business. There really are not any disadvantages to this strategy because the customers are what matter most. If the customers are happy, everything else will fall into place. They have always had quality, and

GM STRATEGIC PLAN efficiency in their company, the weak point has been their relationships with their customers. Now that the relationship is changing, everything else will work out.

Strategic Group
General Motors would belong in the same strategic group as the other car manufacturers. They all have the same goals of being the best manufacturer in the industry. They all strive to make the best cars, have the newest technology, and have the happiest customers, because happy customers mean good business.

Improving General Motors Business Model

In the redesign of the company, GM needs to make sure they commit 100% to their customers; this is something they have struggled with in the past. When they filed for bankruptcy, it was because of the lack of sales, and they lacked sales because the customers were not happy. To try to save money, they laid off thousands of employees, and the customers were also not happy to hear about that. So in the future, GM must stick to their plan and do everything they can for their customers, because without customers, there is no business, and without business, there is no General Motors.

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Business-Level Strategy and the Industry Dynamic

Industry Environment
General Motors is a unique company when it comes to industry environment. Before they went bankrupt, GM was in the shakeout stage. Rivalry between GM and its competitors was very intense and the rapid growth was still there. During the shakeout stage, there can be a price war, and usually the most inefficient company can be driven all the way into bankruptcy (Hill and Jones). This is what happened with GM; they did not please their customers and therefore were the least efficient and went bankrupt. As mentioned earlier, GM is a unique company. They went through the shakeout stage and ended in bankruptcy, but now they are in what could be called a rebirth stage. They have made a very strong comeback from their bankruptcy. They got off to a good start on November 18, 2010, when they completed the worlds largest initial public offering, emerging with a solid financial foundation that enables them to produce great vehicles for their customers and build a bright future for employees, partners and shareholders (General Motors, 2012). So GM has been through the typical stages of a business, and even made a new one with their rebirth.

Protect and Strengthen

In order to protect and strengthen GMs new business model, they have started over from scratch. They got rid of all high end employees and replaced them with people who will do a much better job than the people who were there previously. They then took all of the ideas that worked well with the old GM, and then used brand new ideas to ensure success. On the website it says At the new GM, we make a strong commitment to our customers, employees, partners and other important stakeholders. We state proudly our five principles that guide us in everything we do (General Motors, 2012):

GM STRATEGIC PLAN 1. Safety and Quality First 2. Create Lifelong Customers 3. Innovate 4. Deliver Long-Term Investment Value 5. Make a Positive Difference

New Strategies
New strategies that GM should use to make sure that they stay up on top of the car manufacturing industry would include: First of all, they need to make sure that they are being good to their customers. Ever since their bankruptcy, they have been trying to change the way that they treat their customers and that is why they are working their way back to the top. The other recommendation is to make sure they keep being innovative. Being innovative is huge in any industry today, whoever has the latest and greatest gadgets and technology will always be the leader of the industry. People like new things and they like high tech things, so the better and faster that GM can put out new technology, the better.

Advantage in the Future

General Motors will be very successful in the future. GM already has a great reputation as far as quality of their products goes; all they need to work on is making their social reputation better. People have always trusted GMs vehicles to be safe, fun, attractive, innovative, and technologically sound. Even though it sounds like they have enough, being popular in the eyes of their customers is the most important thing, and it is also the most difficult thing to do. GM is working to rebuild their relationships with their customers after going bankrupt and laying off thousands of employees, once they regain these relationships, they will only grow stronger. By having happy customers, GM will have loyal customers, which means that when people are ready to buy a new vehicle, they wont even look anywhere else. If they build customer loyalty, those customers will likely tell friends about how much

P a g e | 44 they love GM and maybe even convince them to buy from GM, and if that trend continues, they could have many, many new customers to buy from them causing them to head straight to the top of the game.

GM STRATEGIC PLAN

Strategy and Technology

Dominant Product Technology
General Motors, in the automobile industry, has been making quality vehicles for years now. When it comes to creating their vehicles, and not just at General Motors, there are certain technologies that usually are used. The following list is typically the dominant technologies used in the automobile industry (Business & Economics Research Advisor, 2004): Programmable machines and tools; Near-Net Castry; High speed data communication and data management; Supercomputing; Virtual manufacturing and complex visualization techniques; Advanced forging techniques Another particular dominant technology that was not in this listing which is also important to the creation of automobiles is automatic transmission. According to Figure 3.1, which can be found later on in this report, automatic transmission became part of the automobile industry around 1930 to 1940. During this particular decade, the automobile industry was in the shakeout stage (Alexander, 2001). By this time, customers already had a vehicle, and it is possible that those customers did not want to continue to shift gears. In fact, it was GM who introduced this technology in 1941 with the Hydra-Matic in their Oldsmobile vehicles (Peele, 2010). Since then, automatic transmissions are now found in every vehicle.

Technical Standards
There are definite standards when it comes to creating vehicles. SAE International has a listing of over 500 standards that need to be followed in order for vehicles to follow suit under the legal and regulatory environment. The standards range from flywheels for engine mounted torque converters to

P a g e | 46 automotive printed circuits. Though a complete listing of all 532 standards for the automotive industry is beyond the scope of this report, providing an abridged list of what the standards are can give an example of how detailed the standards are for the automotive industry. It is also important to note that these standards are still in development (SAE International, 2012). SAE 17.6 Cubic Inch Spark Plug Rating Engine Flywheels for Engine-Mounted Torque Converters Test Method for Determining Power Consumption of Engine Cooling Fan Drive Systems Shelf Storage of Hydraulic Brake Components SAE Electric Vehicle and Plug in Hybrid Electric Vehicle Conductive Charge Coupler Low Speed Enveloping Test with Perpendicular and Inclined Cleats Ignition Cable Assemblies Ignition System Nomenclature and Terminology Devices for Use in Defining and Measuring Vehicle Seating Accommodation V-Belts and Pulleys Automotive Synchronous Belt Drives

Attributes of the Majority of Customers

General Motors sells many different kinds of vehicles. Currently, the new vehicle that GM has created is known as the 2013 Cadillac XTS (General Motors, 2012). This particular vehicle is known by General Motors to be a luxury car, so those customers who fit the middle- to high-class would be the kind of customer to buy that particular car. When this vehicle comes out, those people would be known as an early adopter because this car is new, and customers are not exactly sure if they would stick with that particular vehicle. However, vehicles have been around since the start of the twentieth century. Back when vehicles were being created by Ford, those customers were known as early adopters. Customers were

GM STRATEGIC PLAN used to the horse-and-buggy mode of transportation, so when General Motors started creating vehicles in 1911, they were seeing customers at the early adoption stage. Due to the change of the industry, those that are now buying GM vehicles are now known as the late majority, but as GM continues to create new vehicles, those customers start becoming early adopters of those new vehicle series, such as the Chevrolet or the Cadillac. As mentioned earlier, GM has created a new vehicle in the Cadillac series, so they are facing customers in the early adoption phase for their 2013 Cadillac XTS. General Motors is doing well for their customer base as they continue to release new vehicles in their vehicle series. The one foreshadowing event that can be seen as GM continues to create new vehicles in their series would most definitely be creating new vehicles that will please new customers coming in.

Dominant Technology
As listed before, there are multiple dominant technologies that are found in the automobile industry. Over time, the technologies that are used to create vehicles tend to diffuse somewhat rapidly, but not too rapidly. Automobiles are extremely complex and the technology used to piece together each vehicle tends to be rather sophisticated. The processes and methods that go into making vehicles need to be up-to-date, which would definitely imply that the dominant technologies that are used to create vehicles diffuse rapidly (Business & Economics Research Advisor, 2004). It is making sure that vehicles are using state-of-the-art technologies while keeping in check they are following the standards for automobile creation that cause the speed of diffusion that the automobile industry goes through. As stated previously, there are over 500 standards to follow when vehicles are being created, and it definitely is no exception for any vehicle, especially vehicles created by General Motors. On the company website, it is mentioned extensively how the company strives to be innovative when it comes to the latest technologies by making them safe and high quality and making

P a g e | 48 sure the vehicles are environmentally friendly. Because GM keeps those factors in check as each new vehicle is assembled, it is no question that the dominant technologies used in creating vehicles would diffuse somewhat rapidly.

Dominant Technology on the S-Curve

S-Curves in the automobile industry typically focus on innovation, growth, and maturity over time. Because of the multiple dominant technologies that are found in the automobile industry, those interested in how technology has been done over time so that todays vehicles are innovative, growing, and maturing as new things arise can take a look at graphs, similar to Figure 3.1.

Figure 7.1 Anatomy of the Economic Cycle (Alexander, 2001)

This particular graph shows two S-Curves with basic auto, from 1900 to 1940. As stated before, the automatic transmission originated in 1941 with General Motors, so then that particular dominant technology started taking over in 1945 to today. It is also important to note that for this particular industry that automatic transmission played a role in the maturity boom of the life cycle, which shows the importance of this particular dominant technology today.

Intellectual Property
The General Motors website discusses intellectual property in their webpage on Website User Guidelines. Intellectual property at GM is defined as anything that is used on their website, such as

GM STRATEGIC PLAN graphics, and their copyrights and trademarks of their vehicle names. Another page of their website, which is devoted to copyrights and trademarks, also discusses notices. This page states that We reserve the right, however, to make changes at any time, without notice, in prices, colors, materials, equipment, specifications, models and availability (General Motors, 2012). The specifications and everything else would be the intellectual property of GM, and if they do decide to make any changes whatsoever, they are more than inclined to do so. These specifications inform not only customers, but also informs employees To make sure that they are protecting their intellectual property, GM has statements within their website that inform their website visitors about their intellectual property. The webpage that discusses their copyrights and trademarks states that if any of these things are to be used, the person would need to express the use of those in writing. This seems to be enough to express their intellectual property rights.

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Strategy in the Global Environment

Value Creation
According to a study done in 2008 by Oliver Wyman, in 2007, Toyota made $922 in profit from every vehicle it manufactured in North America. GM lost $729 on every vehicle they made that year. The difference between these numbers starts with what each company is known for. Toyota is known for quality in the industry. GM is known for having cars that are best in the middle of the pack. This is surprising because usually during tough economic times, people prefer middle class over upper class. This could represent poor management because of the fact that GM did not take advantage of this. One critical value that GM continues to overlook in their company is the importance of its employees, especially the manufacturers. They are the core of GM and must be kept happy to do their job effectively. Giving them higher pay may not seem like it will make the company more profitable, but it could, by increasing productivity because of higher worker morale. GM has a higher labor cost than Toyota which contributes to GM having a greater profit on their vehicles. One thing that GM should have been taking notes on from Toyota is decisions with regard to pricing based on utility, prices, demand, and costs (Hill& Jones, 2010).

Responsiveness
In December of 2010 GM appointed a new chief marketing officer, Joel Ewanick. They did this because they felt a greater need to make their product more globalized and thought this was the man that could get it done. Ewanick wanted to make GM truly global, rather than what is has been a somewhat haphazard assortment of vehicle designs, brand images and advertising strategies spread over the globe. GM realizes that it is important to know the local markets because they will add to developing and launching vehicles. One vehicle model that varies among countries is the Colorado. It is a very poor seller in the United States but in Thailand it tops the charts. GM did their homework before unveiling

GM STRATEGIC PLAN the new mid-sized pickup. Thailand is the worlds largest market for mid-sized pickups so that is where GM decided to unveil the Colorado (GUILFORD & Colias 2011). GM has not addressed the issues raised from employees about not being satisfied with their jobs. If GM does not respond to its employee issues, it may not have cars to sell.

Cost Pressures
In the past three years strong demand from Asia has made basic metal supplies harder to come by, which raised prices. When these prices went up OEM profit margins suffered. Because of the prices in metals it lead to interest in replacement materials in an effort to reduce costs of making vehicles. GMs main strategy in this effort to reduce costs is to develop materials options before vehicles are designed, so they can shift gears down the road is imbalances develop between materials prices. GMs top supply chain executive, Bo Anderson, says the focus is on four materials under significant price pressure: palladium, aluminum, steel, and plastics (Smock, 2008). The customer cares about two main things: low cost and good quality. These are two things that are very opposite of each other yet the customer wants GM to have the best of both. Some things just are not possible but if GM can find a happy medium they will do well.

Strategy
GM has been pursuing a strategy they call their global product development strategy and it is adding up to real savings. With this strategy GM has received sizable price reductions on certain parts and components for its global mid-sized car architecture. GM will not actually see a dollar amount increase in the savings because they will be using the money by meeting new regulation requirements and adopting fuel-saving technologies. Volume is a big part of why GM is getting up to 15 percent reductions on some components. With their strategy GM sources components from fewer suppliers in exchange for big discounts.

P a g e | 52 In my opinion, this strategy may not be as successful as if they were to give the customer more of what they ask for. Even though I may not agree with their strategy the facts are that it is working so GM should continue with it until they feel the need to peruse a different strategy (Stein, 2007).

Foreign market
A major foreign market that GM serves is China. In 2006, GM passenger vehicles in China rose 28.5 percent. GM planned to keep the sales rising by strengthening the brand images of Chevrolet and Buick. GM annually invests $1 billion in China marketing and plant improvements. It seems odd that GM is selling vehicles better in China and Chinese vehicles are selling better than ever in the United States. GM having manufacturing plants in China reduces their costs of making vehicles and allows a greater profit margin so it is a smart plan. If they can sell vehicles in the same country they are made it will reduce on shipping costs and make greater profits (Webb, 2007).

GM STRATEGIC PLAN

Corporate-Level Strategy
Horizontal Integration Strategy
Since General Motors start in the twentieth century, General Motors has acquired and merged with many automobile companies. The website, The Heritage Center, has a page that lists many of GMs mergers and acquisitions. One of the first acquisitions that GM participated in was the acquisition of the automobile company, Oakland, in 1909. During this time, Billy Durant noted that Oakland was not doing well with their sales and Oaklands debt was growing larger. Durant purchased a 50% interest in Oakland, and when Oaklands founder died, Durant increased the interest to 100% (The Heritage Center). In 1931, GM made a merger that would soon be a cornerstone for the company. This year, Lawrence decided that it would be good for the company to merge with Holdens, which was based in Australia. The reason for this particular merger had something to do with the Great Depression. Holdens was not doing well financially, and the Australian government had frozen their currency so that their money could not be distributed outside of the company (Unique Cars and Parts, 2011). These two examples of acquisitions and mergers in which GM has participated over the years shows that GM cares for how other automobile companies are doing. When GM recognizes that a certain company is not doing well, they are more than willing to help them out, whether it is by participating in a merger or an acquisition. This discernment that GM has for other vehicle companies has helped them before, and will help them out as they continue to thrive.

Vertical Integration Strategy

For a long time, General Motors had produced their own materials for their products. The company operates about 41 factories that produce parts for their vehicles, and 11 of those factories are for general assembly (Romero, 2010). Wikipedia has a list of those factories on their webpage, List of General Motors Factories along with those factories that have closed down. GM has used vertical

P a g e | 54 integration for some time now. In fact, they promoted their vertical integration strategy in the 1970s because it was a source of financial strength and savings (Bradsher, 1998). On August 3, 1998, they had announced that they were planning on spinning off their gigantic auto parts subsidiary to their shareholders. This particular article, written by Keith Bradsher, states that the spinoff of the auto parts subsidiary, Delphi Automotive Systems, represents nothing less than a fundamental shift away from vertical integration.' There have been some interesting things that have happened after this particular announcement. In 2005, GM announced that they had a far-reaching restructuring plan to close nine plants and three service and parts facilities, cut 30,000 jobs, and reduce North American production capacity by 1 million vehicles a year (Gross, 2005). Another area of interest to note is that in 2009, it was reported that GM had bought back Delphi factories (Lariviere, 2009) . Because of GMs decision to spinoff their auto parts subsidiary, they were shifting away from vertical integration, only to return back to it. It seems that within the past decade, GM has made some radical decisions that may possibly have influenced the low worker morale. With the cut of the 30,000 jobs in 2005, employers were still worried about their own particular jobs, which would in turn cause morale to become low.

Increasing Profitability through Vertical Integration

Vertical integration has been a major part of GMs past, and as stated previously, they had shifted away from vertical integration for a few years, but then coming back to it around 2009. The following table illustrates GMs gross profit from 2005 to 2011. 2005 $49,102 million 2006 $38,482 million 2007 $54,638 million 20081 $8,390 million 2009 7.36 billion 2010 23.9 billion 20112 26.6 billion

Gross Profit

Figure 9.1 GM Gross Profit from 2005 2011

1 2

Data from 2005 to 2008: (Hot Stocked, 2012) Data from 2009 to 2011: (wikinvest, 2012)

GM STRATEGIC PLAN As evidenced by the table, there has been growth in the gross profit from 2005 to 2011. This provides as an analysis as to how GM has done in 2005 in jobs cut as well as a reflection as to how their setbacks have impacted their gross profit. This data also supports the buyback of Delphi in 2009. The gross profit had increased dramatically in 2009 to 2011. Because they want back to vertical integration around this time, they have definitely increased profitability.

Outsourcing
In further analysis of the table provided in the previous section, there really would not be much of a need to outsource any of their operations. As stated earlier, they had tried to stray away from doing any vertical integration, especially with their auto parts subsidiary, Delphi, only to buy the company back in 2009. The reason why GM had bought back the company had to do with their financial troubles, and thought that if they did buy back Delphi, that they would start doing much better, and as shown in the table above, doing so really did help them out. If they were to outsource even this particular area of the automobile industry, there is some concern that they would be forced to reduce their workforce again, cut back on operations, and possibly sell the operations.

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Corporate-Level Strategy: Diversification

Restructuring strategy
As stated earlier in this report, GM had to change their ways. The reason that GM needed to pursue a restructuring strategy is because they went bankrupt. GM was facing 100 years of

accumulated obligations which it had no way of paying back. The government stepped in and wiped these debts clean and GM had to turn the companys management over to a team of Detroit outsiders who view the business with fresh eyes. GMs former management was to blame for them being in this position and the government realized they needed new people in charge to turn the company around. Worker moral was low in the company and a company with employees who are not happy is not producing their full potential. GM needs to ask the employee what they want and need from the company and manage a way to give it to them (TAYLOR III, 2011).

Exited Industry
GM had certain vehicles models that were not selling and causing problems for the company. GM referred to these models as burdens and decided it was in their best interest to stop them from being produced. The three most notable models that GM stopped producing were Pontiac, Saturn, and the gas guzzling hummer. In return it could have more focus on their best-selling models (Brown, 2011).

Strategy to exit
In 2008, GMs problem was not manufacturing or labor. Its biggest problem was legacy costs. The decision to stop the manufacturing of these models that are not big sellers any more may lead to bigger and better opportunities for GM. If they can take these manufacturing lines and redesign them to make their better selling models it will be an asset to their company. This move will offer a more time and effort to the better selling models GM has to offer. If a product is not selling, it should be given a chance to be redesigned and sold again. If at this time it fails the losses should be cut because it is

GM STRATEGIC PLAN appearing that the product will never make money. This is a management decision and if the

management cannot make the decision to cut the sunk costs they should be replaced (Brown, 2011).

Opinion on exiting
In my opinion it was a smart move for GM to cut some of the models that were more of a burden to them than an asset. It opened to the door for them to enhance their other models to make them more desirable by consumers. In my opinion it was smart to cut the ties with them fast because if people know they are going to stop making that model, they will be less likely to buy one for fear of future needs like getting parts for them.

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Corporate Performance, Governance, & Business Ethics

Stakeholder Groups
When it comes to groups and individuals that have some sort of stake in how successful General Motors is over the years, one must take into account that there are many stakeholders that want to see this company succeed and do well with their many vehicles as well as their business models. One of the major stakeholder groups that nearly every company has, are their customers. The customers are the ones that are mostly affected by the company, and this is through their products. Customers need to know that the vehicles they will be purchasing from this particular automaker are safe, economical, and eco-friendly. When GM puts out any commercial advertising their new vehicle, they are advertising these three things. Other groups of stakeholders who are affected by decisions made by GM include parts suppliers, dealers, debt-holders, shareholders, workers and retirees (Clark, 2009). These stakeholders do business and work with GM on a regular basis, and they place a claim on GM so that they can do ethical and positive business with GM. Because GM produces many vehicles, the part suppliers, dealers, and all the other stakeholders have a responsibility so that proper business practice is done, and so GM can continue doing business with them. It doesnt matter in what stakeholder group one belongs to, they need to know how business is doing periodically. One thing that GM does to keep communication going is publishing their annual report. The report starts out with a letter to the stakeholders, which addresses what has gone on for that particular year. In 2010, GMs CEO prepared a letter that addressed The new GM. In this letter, he writes, We truly are building a new GM, from the inside out. Our vision is clear: to design, build and sell the worlds best vehicles, and we have a new business model to bring that vision to life. We have a lower cost structure, a stronger balance sheet and a

GM STRATEGIC PLAN dramatically lower risk profile. We have a new leadership teama strong mix of executive talent from outside the industry and automotive veteransand a passionate, rejuvenated workforce (General Motors, 2010). This particular quote from the 2010 Annual Report shows that GM is now more than ever serious to have vehicles that meet the needs of their stakeholders, especially the customer need from GM. Not only does this show the growth of their product line, but this also shows the particular people that make up the company. Through this restructuring that GM is doing, they have workers that are enjoying their work and enjoying being at work. When employees enjoy working for their company and enjoy the work they do, it helps increase worker morale, which is needed at GM.

Performance of the CEO

Since 2010, Daniel Akerson has been CEO of General Motors. Akerson is not just the CEO; he is also the Chairman of the Board. He has been the chairman since July 2011. Since Akerson has been at GM for two years, his performance has been viewed by shareholders, employees, customers, and suppliers. These different perspectives, especially with the employees, can give insight in how to ensure better worker morale.

Stockholder Perspective In 2011, Dan Akerson held a meeting with stockholders that reflected his positive outlook on General Motors. Mary Conway reported that the company is well positioned for the future with more fuel efficient cars on the way. In a video posted with this article, Akerson also stated that the new GM is more agile, and that the company will be more profitable as they move forward with new vehicles (Conway, 2011). So far, stockholders are in agreement with Akerson, and are content with the sales of how things are going. Quite recently, the US Treasury froze several companys CEOs salaries, and Akerson was part of that freeze. His salary ended up being frozen at $9 million. The reason for this salary freeze was because GM received help from the government, but did not repay their public debt.

P a g e | 60 This may end up great for stakeholders, because, pay freeze gives these executives much more incentive to return the government's money as soon as possible (Gutone, 2012). This freeze will give stakeholders an even better perspective, knowing that the freeze will do well in paying off the debt.

Employee Perspective As mentioned earlier, executive pay at GM has been frozen for now, and with the salary freeze, employees are definitely happy with the freeze. Not only are they happy with the fact that Akersons pay has been frozen for now, but salaried workers are really enjoying the fact that they will be receiving five more vacation days than normal (Krisher, 2012). There are about 26,000 salaried employees that are employed by GM. Since Akerson made the decision to spend more than $500 billion on employee bonuses and profit-sharing based on the performance of the company in 2011, employees are connecting their performance to their compensation. A compensation specialist for World at Work notes that GM needs to reward employees because of the labor market becoming more competitive than it was before, and this especially affects those at GM who work in skilled jobs, such as computer experts and engineers. These white collar employees really are deserving of the rewards. Because of this choice that Akerson has made in early 2012, employees are definitely becoming more content with their work lives and with their perceptions of how Akerson is performing for the company.

Customer Perspective Just as employees and the stockholders are content with how Akerson is dealing with business inside of the walls of General Motors, so are their customers. On January 25, Akerson gave a testimony in Congress in regards to the safety of the Chevrolet Volt. Akerson stated that 93 percent of Volt owners report the highest customer satisfaction with their car. These Volt owners are showing their satisfaction not only towards these particular vehicles, but they are also showing their satisfaction with how Akerson is handling business (General Motors, 2012). Later on in this testimony, Akerson mentions

GM STRATEGIC PLAN that customers are placed in high priority, and this reflects how the customers are feeling in regards to Akersons performance. Akerson also reported that a customer once said that, if they couldnt cut him out of the vehicle in two or three weeks, he had a bigger problem to worry about. This particular customer was saying that he trusts the performance of General Motors as well as Akerson himself. Akerson also made sure that during this trouble with the former version of the Volt vehicles that the company called each Volt customer and offered them a loaner car until the issue was settled. And if that wasnt enough, we offered to buy the car back. This shows just how much Akerson cares for his customers, and in turn, shows the customer that Akerson is doing well in company performance.

Supplier Perspective Around 2009 when GM was going through their bankruptcy, one of the main groups of people that were very much affected by the bankruptcy was the suppliers. In part of the preparation for their bankruptcy, General Motors had to idle their factories, especially American Axle & Manufacturing Holdings Inc. and Shiloh Industries, Inc (Ortolani, 2009). During this time, the suppliers sales were shrinking because of the bankruptcy. However, this does not mean that GM would not be paying outstanding bills; in fact, they were allowed to do so by a bankruptcy judge before they could officially file for Chapter 11 bankruptcy. CEO Dan Akerson made sure all of this was taken care of, which encouraged the suppliers to continue business with each other. Later on in 2012, Akerson held a Best Global Suppliers event at the Detroit Institute of the Arts. At this event, there are a few awards that are handed out to suppliers, and one of the awards is known as the Supplier of the Year. This is awarded to the supplier that shows strong partnership, dedication and commitment to consistently perform above expectations played an important role in GMs success in 2011, according to Bob Socia. These awards are showing GM that suppliers are doing their part in performing above expectations so that they can continue supplying the products that GM is needing,

P a g e | 62 and it also shows that Akerson cares for the productivity of his suppliers and will continue to reinforce that behavior.

Evaluation of the Perspectives Overall, this shows that Akerson is doing his best to show GM that he wants the people that work for GM to do well, and that he is committed to assisting the stakeholders, employees, and suppliers to do the best work they can do so that GM can continue to thrive in the automobile industry. When it comes to the customers, Akerson shows concern for what the customers need in their vehicles, and continues to look for new, innovative ways to make their vehicles economically and environmentally friendly. With each perspective that each group has given, it is evident that Akerson is effective as the CEO of General Motors.

Governance
When it comes to aligning interests of top managers with those of stockholders, companies tend to use governance mechanisms to ensure that they are doing a good job with aligning these interests. According to the textbook, Strategic Management: An Integrated Approach, there are four main types of mechanisms: the board of directors, stock-based compensation, financial statements, and the takeover constraint (Hill & Jones, Strategic Management: An Integrated Approach, 2010). These four mechanisms need to be taken account in order to ensure that GM is doing well in aligning with top managers and stockholders.

Board of Directors In April of 2009, the Obama administration saw fit to help reshape how the Board of Directors are doing in their business practices. This was done in light of the fact that some of the people who were representing GM in the Board of Directors needed to be removed. They were not doing well at this time because of the stress of having to go through the Chapter 11 bankruptcy. During this time, it was important for the stakeholders and the Board of Directors to be properly aligned so that everyone

GM STRATEGIC PLAN came into agreement so they could stay out of the courts, due to the debts they had and were doing their best to pay off. Since then, the Board of Directors and GM have stayed on the same page with doing good work.

Stock-Based Compensation As mentioned previously, executive pay has been frozen this year, and it is benefitting the company so that they can pay off their debts in a timely manner. As a result of this freeze, the salaried employees are enjoying their five extra days of vacation. Stockholders are also affected by this freeze in that they are assured that debts will be paid off, and are in agreement with the decision to use this time of the freeze to pay off those debts. With the freeze, the public debt that GM owes will be paid back in two years, considering all things end up going well for the company (Gutone, 2012).

Financial Statements On February 16, 2012, General Motors released their financial statement from 2011. According to their article on their website, General Motors Co. (NYSE: GM) today announced 2011 calendar-year net income attributable to common stockholders of $7.6 billion, or $4.58 per fully diluted share, up from $4.7 billion, or $2.89 per fully diluted share, in 2010. Revenue increased 11 percent to $150.3 billion, compared with $135.6 billion in 2010. Full-year earnings before interest and tax (EBIT) adjusted was $8.3 billion, compared with $7.0 billion in 2010 (GM Reports 2011 Net Income of $7.6 Billion, 2012). This financial information shows that General Motors is good with working with their stockholders and that their interests are looking great when aligning with what top managers want to see with the governance mechanisms.

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Major Strategic Decision

In November of 2011, General Motors and their local joint venture partner UzAvtosanoat opened a new state-of-the-art engine plant in Tashkent, 400 kilometers from the automakers vehicle manufacturing facility in Asaka. This decision to do so represents this to be for GM a most significant powertrain investment in Central Asia. This energy plant is energy-efficient, which helps GM because they are always looking for new and innovative ways to continue with successful business while still keeping their value of being environmentally friendly towards the country they are opening the engine plant. In terms of being environmentally friendly, the company has employed advanced

environmental-protection processes throughout the facility, including the most modern wastewater treatment technology in Uzbekistan with the purest discharge of any facility of its kind within GM. Because GM made sure that they are sticking to their values with innovation and being environmentally friendly, ethical boundaries have not been crossed. With this particular facility, they are employing 1200 employees at the facility, so now GM needs to make sure that employee morale at this particular facility is going well (GM Opens Engine Plant in Uzbekistan, 2011). Considering that GM Uzbekistan employs approximately 6,600 employees, this is something to ensure that the corporate culture and values are being treated well and that employees are handling the transition to a new facility.

GM STRATEGIC PLAN

Implementing Strategy Competing in a Single Industry

Size of Business and Levels of Hierarchy
General Motors ranked 20th on CNNs annual ranking of the worlds largest companies with 202,000 employees (CNN, 2011). GMs previous rank was 38, but has since moved up in the list. After they went bankrupt, GM started new and hired more employees and is now stronger than ever. GM used to have a tall hierarchy with many different levels and managers, which was before they went bankrupt. Because of this tall structure, they experienced communication problems and other problems that lead to conflict. Now that they have since started over, they have flattened out the structure and also have a centralized decision making approach, which has caused them to be much more successful (General Motors, 2012).

Authority and Responsibility

The newly appointed interim chairman Ed Whitacre, decided to use his new power and make a complete change in the management at GM. Whitacre said, I want to give people more responsibility and authority deeper in the organization and then hold them accountable, Whitacre said. Weve realigned our leadership duties and responsibilities to help us meet our mission to design, build and sell the worlds best vehicles (Luft, 2009, p. 1). By doing this, he gave more power to fewer people, for example, he made Susan Docherty responsible for sales, support, and marketing (Luft, 2009). The result of these changes, if GM is failing in any of those areas, blame can be given to one person making it much easier to take care of the problem and find someone new if necessary. GM shouldnt change anything in how they are giving authority and responsibility; it makes a lot of sense to give more power to fewer people because it is much simpler to resolve if there are problems. Rather than laying off countless employees, they will now only have to get rid of a few.

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Organizational Chart Divisional Structure

According to a glossary on the Essentials of Contemporary Management webpage, a divisional structure is an organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer (Jones & George, 2009). The following figure shows the organizational structure of General Motors, the left column is composed of the board of directors for GM, the middle column shows the different departments that make up GM; and the right column shows the different sub-divisions and where they report to. Each sub-division reports to a different department in their structure, and all departments report back to Daniel Akerson, the CEO.

GM STRATEGIC PLAN

Figure 12.1 - (The Official Board, 2012)

Why Did GM Choose A Divisional Structure?

GM chose the divisional structure because it is the most effective way. A divisional structure groups an organizations activities by division to achieve its goals in the most effective way. Divisional structure also helps a company to better produce and transfer its goods and services to customers.

Integration
When GM started over after being bankrupt, they used integration to help make their hierarchy and organizational chart more compact. Instead of having a lot of employees with a bunch of different responsibilities, GM decided to integrate those responsibilities to make it so there were fewer people, but those people have more responsibilities. This made it easier to solve problems because there were fewer people to blame for problems.

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Control Systems
The purpose of a control system is to provide managers with (1) a set of incentives to motivate employees to work toward increasing efficiency, quality, innovation, and responsiveness to customers and (2) specific feedback on how well an organization and its members are performing and building competitive advantage so that managers can continuously take action to strengthen a companys business model (Hill and Jones 380). Since GM is still recovering from their bankruptcy, they are using methods of motivation employees that do not require money. A study involving 300 participants was done to see how companies can motivate employees without money (Krenek, 2011). The study concluded that the two most important factors to motivating employees came down to respect and company pride. So with these results, GM has made sure that they keep respecting their employees to the highest degree. Respect makes people happy, and when people are happy, they will work harder. It is also very important for an employee to be proud to work for their company. After all this, GM has made sure to keep their employees proud by making sure that they respect their employees, and by making moral decisions in everything they do to avoid conflict (Krenek, 2011).

Top Managements Role

Top managements role in a company is very important. The decisions that top management make will affect the entire company, so their decisions are very important. The values of GMs new top management are greatly improved than before. The new top management believes in treating customers the way they should be treated, with respect. Before GM went bankrupt, the old management did not do a very good job with its customers which caused them to lose a lot of customers and eventually file for bankruptcy, but now GM is back on the right track with its customers and they are making a strong come back to being the top automotive manufacturer in the U.S.

GM STRATEGIC PLAN

Distinctive Competencies
The source of General Motors competitive advantage comes from all four of its qualities: efficiency, quality, innovativeness, and responsiveness to customers. GM has always been known for their efficiency, quality, and their innovativeness, but it hasnt been until the past couple years that GM has been good to their customers. When GM went through their bankruptcy, a big part of it was because they did not treat their customers the way they should have. Now that GM is back on their feet and is now a strong company again, they can thank their new management for making sure that they treat their customers respectfully and help them to the fullest of their abilities.

GMs Matrix Structure

General Motors has a matrix structure because they have separated all of their managers and projects into separate divisions. Matrix structures promote innovation and speeds up product level development which means that they can stay ahead of the game by coming out with new products faster than their competitors.

GMs Culture
General Motors culture is simple, design, build, and sell the worlds best vehicles. GM values simplicity, agility, and they believe in action (The Official Board, 2012). In order to achieve their goals, GM has remained committed to the following formula for success: Move faster and take risks to achieve sustained success, not just short-term results Lead in advanced technologies and quality in creating the worlds best vehicles Give employees more responsibility and authority and then hold them accountable Create positive, lasting relations with customers, dealers, communities, union partners and suppliers to drive our operating success (The Official Board, 2012)

P a g e | 70 Top management influences the companys culture because they are the ones who came up with this formula. Without top management guiding the company in the right direction, they would not be nearly as successful as they are now.

Coordinating and Motivating

I think that GMs top management is doing very well with coordinating and motivating their employees. It really shows how important management is to a company when you look at the story of GM and what they have been through in the past few years. With its old management, their beliefs and actions caused the company to go completely bankrupt. Now that new management has taken over, GM has fully recovered and even started to go beyond what it used to be. The only thing that GM should have changed from the past has already been changed. The old GM was terrible to their customers, causing them to lose a large number of them. After filing for bankruptcy, GM realized they needed to completely start over. They completely overhauled their top management and by doing so added new beliefs, policies, and new motivations for employees. These new managers have kept employees very happy and proud to be an employee of General Motors. They have found the key to success inside and outside of the workplace, respect. By respecting their employees and their customers, GM has become more successful than ever. When customers and employees are happy, they are more loyal and harder working. All of these things lead to success, and success means money.

GM STRATEGIC PLAN

Implementing Strategies in Competition Across Industries and Countries

Multidivisional Structure
GM does have a multidivisional structure. It has used this ever since 1921 when its first CEO, Alfred Sloan, implemented a multidivisional structure. This was a good decision by one of GMs CEOs, something that has been lacking in recent years. Sloan noted that GM needs to find a principle for coordination without losing the advantages of decentralization. (Hill & Jones, 2008, P.425) GMs current CEO needs to think more like this if he plans to be successful. In the past years before GM went bankrupt there was confusion within the company walls. They were lacking a chain of command structure in management that would help give order to the company.

Integration Mechanisms
When Sloan introduced his multidivisional structure to GM he placed each of GMs different car brands in a self-contained division so it possessed its own functions. The functions included sales, production, engineering, and finance. He also set in place a transfer-pricing system based on the cost of making a product plus some agreed-on rate of return. It still uses these strategies today, but beings times have changed and the company could use other changes it may be better to implement different integration mechanisms. (Hill & Jones, 2008)

Corporate-Level Strategy
In 1998, GM decided to change its corporate level strategy. They thought that the competitive forces at that time were forcing many companies, including themselves, to innovation. In 1998 GM began to focus on business innovation as a corporate strategy. GM did not do enough research and homework on this change in strategy before they implemented it. GMs CEO at the time told Larry Burns, Vice President at the time that they should focus on putting more effort into business innovation and growth rather than continuous improvement. This strategy ultimately failed and was just one of the

P a g e | 72 reasons that led to GMs bankruptcy and left them searching for yet another change in strategies. (Hemerling, 2007).

International Strategy
In 2002, GM bought up parts of a bankrupt Daewoo Motor and people around the world were laughing at them. But GM knew that this was part of their international strategy to get their name in more countries around the world. GM gave Daewoo ambitions, as a base for exports throughout Asia, especially the booming Chinese market. Today Daewoos factories have doubled their capacity

utilization. Vehicles made at their factories are being exported to GM-related companies in 120 countries in Asia, Europe and North America. GMs quest for a global synergies got off to a rocky start. But now, GM is putting the pieces together, tapping the engineering, manufacturing and distribution resources of its global partners. GMs strategy to sell the cars in only the countries that they sell well in could save billions of dollars. Over the past thirty years GM has been investing in other motor companies in order to create a joint venture with them. In recent years is seems this is starting to pay off as it takes time to tweak the plans and get everything running smoothly. In the future management at GM should look for more opportunities like this to keep keeping the ventures going. If people no longer like the package the current ventures offer together GM will be stuck with only their current partners and people may want something new. (Muller, J., & Meredith, R., 2004) With all of these joint ventures and other manufacturing plants opening in other countries, current employees at GM may wonder how secure their careers are. People do not want to put their best effort forward if they feel they are not being treated with equal respect from their employer. GM needs to be up front and honest with its employees to ensure they are on the minds of the managers and that the managers care about the employees.

GM STRATEGIC PLAN

Altering the companys structure

In the recent years since GM has went bankrupt they have had a good start in strengthening the company. They have made plans to cut the models that have been lacking in sales because in all reality they were costing them money. At times it seems there can be confusion or too many people in the company trying to make decisions. GM should think about minimizing their chain of command in order to save money and not lose control over the hierarchy.

Particular entry mode

GM does not really have a particular entry mode that it uses to implement its strategy. When they see an opportunity, they research it and weigh the benefits against the risks. This is an area that could be better managed in the company. When GM opens a new facility in a new country they do however do certain things right in the way they enter their market. They give the customer what they want in that area. If a vehicle is not selling good in that part of the world, that plant wont make it. If they did make vehicles in one country then shipped them to another they would have to take into consideration the added cost of shipping. GM needs to be more responsive in what their employees want or need from the company. The first step in this would be to ask the employees what they want from the company and not just wait for them to have a bad attitude and create low worker moral. (Muller, J., & Meredith, R., 2004)

Use IT to coordinate
GM has been focusing on its IT technology primarily since the 1984 when it formed an IT service company named EDS. GM believed their IT innovation would have to start with the right employees so they hired over 1000 employees to work in the IT department. GM uses IT in the making of their cars as well as on their cars. Production is the one of the most significant area in the value chain that GM has increased their IT level in recent years. They have used IT to shrink its workforce and boost productivity with the use of things like robots to do welding in the manufacturing line. A customer service is also a

P a g e | 74 major area that GM has used IT to improve their company. GM engineers are equipped with the most state of the art equipment in order to increase fuel efficiency, increase safety, and reduce costs. These have all been used well but there was one big problem, timing. GM was in the last of the running to be equipped with most of these IT capabilities. (Brown, 2011)

Multibusiness
GM was once a power house when people talked about multibusinesses but this is not the case anymore. They do have a good structure having each of its car brands in a self-contained division so it possesses its own functions-sales, production, engineering, and finance. Each division is treated as a profit center and evaluated on its return on investment. What this means is that GM should have been able to see their bankruptcy coming. If they would have taken earlier modes of action they may have been able to avoid bankruptcy. GM needed better management to overlook their structure so they could maintain the level of excellence they once had. They facts were in front of them and no one took action, which shows poor leadership (Hill & Jones, 2008).

GM STRATEGIC PLAN

Conclusion & Recommendations

As stated previously, the main reason for this particular proposal is to assist General Motors in the improvement of their low worker morale. Using many methods to reach this conclusion, it is evident that General Motors is indeed quite aware of the low worker morale; now they need to implement ideas such as restructuring of their management-employee relationships, offering training that has sensitivity training as the main focus for both management and the employees, and implementing other methods for employees to talk to top executives, so that they can make proper decisions about what to do when a particular situation arises. It is important for employees to feel a part of the team and also to feel comfortable in their working environment, and by offering the training and the modes of communication with top management, employees will be able to feel encouraged to step up in their work as well as have the pride necessary to input quality and efficient work. As stated previously, GM has many competitive advantages over other automobile companies, and by focusing on placing the employee with the same importance as top management, General Motors will be even more competitive than ever before.

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Appendix
2010 Annual Report, 59, 77 acquisitions, 53 airbag, 9 Akerson, 11, 25, 27, 59, 60, 61, 62, 77 Alfred Sloan, 71 American Axle & Manufacturing Holdings Inc, 61 annual percentage state GDP in automotive manufacturing, 18 auto manufacturing, 19 automatic transmission, 45, 48 automobile industry, 11, 12, 13, 22, 24, 27, 37, 45, 47, 48, 55, 62 automotive design, 8 automotive industry, 8, 9, 11, 18, 19, 21, 23, 25, 46 bankrupt, 11, 23, 30, 36, 37, 40, 42, 43, 56, 65, 67, 68, 70, 71, 72, 73 bankruptcy, 10, 18, 23, 25, 33, 35, 36, 37, 41, 42, 43, 61, 62, 68, 69, 70, 72, 74, 77 bargaining power of buyers, 17 bargaining power of suppliers, 17 Best Global Suppliers, 61 Bo Anderson, 51 board of directors, 62, 66 brand recognition, 12 Buick, 8, 9, 10, 12, 23, 29, 31, 35, 39, 52 Buick Roadmaster, 9 build, 10, 11, 21, 23, 42, 43, 58, 65, 69 Cadillac, 8, 9, 10, 23, 35, 39, 46, 47 catalytic converter, 9 CEO, 1, 5, 11, 23, 25, 35, 58, 59, 61, 62, 66, 71 Chairman of the Board, 59 Chevrolet, 9, 10, 12, 14, 23, 29, 33, 35, 36, 39, 47, 52, 60, 77 Chevrolet BelAir, 9 Chevrolet Corvetter, 9 Chevrolet Volt, 14 Chevy Volt, 9 closeness of substitutes, 17 Colorado, 50 competitive advantage, 27, 28, 31, 33, 68, 69 consolidation, 24 control system, 68 copyrights and trademarks, 49 corporate level strategy, 71 customer support, 23, 25, 33 customer support system, 23 customers, 10, 12, 14, 21, 23, 25, 28, 30, 31, 33, 36, 37, 39, 40, 41, 42, 43, 45, 46, 47, 49, 58, 59, 60, 62, 67, 68, 69, 70 Cyriac Thomas, 12 Daewoo Motor, 72 Daniel Akerson, 11, 59, 66 dealership, 19 Delphi factories, 54 demand, 8, 14, 50, 51 design, 8, 10, 23, 30, 32, 36, 58, 65, 69, 78 Detroit Institute of the Arts, 61 divisional structure, 66, 67 dominant technologies, 45, 47, 48 dominant technology, 45, 48 early adopters, 46, 47 Ed Whitacre, 65 employee reviews, 13 employees, 10, 15, 16, 19, 20, 21, 23, 24, 28, 29, 30, 31, 32, 34, 35, 36, 38, 41, 42, 43, 49, 50, 51, 56, 59, 60, 62, 63, 64, 65, 67, 68, 69, 70, 72, 73, 75, 79 energy efficient vehicles, 14 environment, 14, 20, 21, 28, 31, 38, 39, 42, 45, 75 EPA Energy Star Certification, 28, 76 Ewanick, 50 executive pay, 60, 63 factories, 12, 53, 61, 72 financial statements, 62 five forces, 17 fuel cells, 20, 82 General Motors, 8, 9, 10, 11, 12, 13, 20, 21, 23, 24, 26, 27, 28, 30, 31, 32, 33, 36, 41, 42, 43, 45, 46, 47, 48, 53, 58, 59, 60, 61, 62, 63, 64, 65, 66, 69, 70, 75, 76, 77, 78, 79, 80, 81, 82 Glass Door, 16, 20, 78 Glidepath, 30 globalization era, 9 GMC, 10, 12, 23, 29 goal, 11, 28 governance mechanisms, 62, 63 Great Depression, 53 Healthcare costs, 15

P a g e | 84 independent front wheel suspension unibody construction, 9 innovation, 14, 22, 23, 31, 33, 35, 36, 40, 48, 64, 68, 69, 71, 73, 76 intellectual property, 48, 49 Intellectual property, 48 intensity of rivalry, 17 Joel Ewanick, 50 Lansing Company, 29 Larry Burns, 71 late majority, 47 LEED Gold standard, 29 legacy costs, 56 low work morale, 15 maintenance, 19 manufacturers, 8, 14, 41, 50 market segmentation, 39 marketing innovation, 8 matrix structure, 69 merger, 53 mergers, 53 mission statement, 10 multidivisional structure, 71 new GM company, 10 NUMMI, 9, 34 Obama administration, 62 Oldsmobile, 8, 39, 45, 80 one-piece steel roof, 9 OnStar, 21, 29 OnStar Technology, 21 opportunities, 11, 13, 56, 72 partners, 10, 42, 69, 72 percentage of automotive employment manufacturing in automotive parts manufacturing, 18 Pontiac, 8, 12, 39, 56 poor leadership, 15, 74 Power and Associates Initial Quality Study, 35 product level development, 69 product line diversification line, 22 production, 8, 22, 27, 29, 35, 54, 71, 74 rebirth stage, 42 recycling, 19 reducing emissions, 9 repair, 19 risk of entry, 17 Roger Smith, 34 SAE International, 45, 81 salary freeze, 59, 60 sales, 9, 10, 11, 15, 19, 23, 35, 36, 39, 41, 52, 53, 59, 61, 65, 71, 73, 74, 79 Saturn, 9, 12, 56 S-Curves, 48 sensitivity training, 15, 16, 75 shakeout stage, 42, 45 Shanghai Automobile Industry Corporation, 33 shareholders, 23, 42, 54, 58, 59, 77 Shiloh Industries, Inc, 61 Sloan, 71 StabiliTrak, 30 stakeholders, 42, 58, 59, 60, 62 standards, 19, 45, 47, 81 stock-based compensation, 62 strengths, 12, 13 Supplier of the Year, 61 suppliers, 51, 58, 59, 61, 62, 69 Susan Docherty, 65 SWOT analysis, 11, 13, 14, 15, 17, 20 takeover constraint, 62 The Heritage Center, 53, 81 threat of competitors, 14 Toyota, 9, 31, 32, 34, 35, 36, 50, 82 U.S. Environmental Protection Agency, 29 U.S. Small Business Administration, 19 U.S. Treasury, 10, 23 UzAvtosanoat, 64 vehicle manufacturers, 8, 39 vertical integration, 27, 54, 55, 80 vision statement, 10 weaknesses, 11, 13 William Billy Durant, 8 worker morale, 12, 15, 20, 21, 27, 28, 32, 50, 54, 59, 75 workers morale, 13