CHAPTER 1: CASE OVERVIEW

1.0 CASE OVERVIEW

Calling it one of the most difficult years in GMs history, General Motors CEO Richard
Wagoner announced Thursday that the worlds largest automaker had lost $4.8 billion in the
fourth quarter of 2005 and $8.6 billion for the entire year. The company has posted five
consecutive quarterly losses and its first unprofitable year since the recession of 1992.
The huge losses were centered in GMs North American automotive operationswhere profits
fell by $7.6 billion in 2005and prompted demands by Wall Street analysts that GM embark
on an even more aggressive cost-cutting plan than the one it announced last November, when
the car company said it would save $11 billion by shutting down 12 plants and eliminating
30,000 jobs. With the companys share values at an 18-year low, analysts continue to predict
that GM may soon slide into bankruptcy. Despite offering large customer incentives last
summer, GM sales and market share continue to plummet. General Motors, which once sold
one in two vehicles bought in America, now controls 26 percent of the US market, its lowest
share since 1925. On a world scale, GMs market share has fallen to 15 percent, and the
Japanese carmaker Toyotawhich is boosting outputis expected to surpass it as the worlds
biggest automaker this year.
GM, Ford Motor Co. and DaimlerChrysler AGs Chrysler Group have seen their US market
share decline steadily over the last 10 years, from 72 percent in 1995 to 57 percent last year,
while foreign auto companies, particularly Toyota and Nissan, held 43 percent of the US
market in 2005, their highest share ever. One central reason for the decline is the Big Three
auto companies heavy reliance on highly profitable sport utility vehicles and trucks, hard hit
by rising gas prices, which some analysts predict will hit close to $3 a gallon this summer.
The response to this decline has been a savage attack on jobs and autoworkers living standards,
an assault that will now be stepped up. Wagoner blamed GMs losses on our huge legacy cost
burden, a euphemism for the billions of dollars in the health care and pension payments owed
to 750,000 retired autoworkers and their dependents. Last year, after Wagoner threatened to
unilaterally impose health care cuts on its retirees, the United Auto Workers union accepted
unprecedented cutbacks in medical benefits.
Theres a lot of issues that we need to discuss in the next contract, Wagoner said, and a lot
of improvements that we see possible in cost competitiveness even between now and the next
contract. We want to work every day on it and well not wait until September of 07 to address
MGT 538: Strategic Case Analysis 1|Page
some of these issues. With GM planning to add tens of thousands more workers to the jobless
rolls over the next three years, the company is counting on the UAW to eliminate or cut back
the program. Alluding to the unions long record of collaborating with the Big Three to cut
labor costs, Wagoner said, We need to sit down and work with the UAW on the best ways to
make sure were competitive. I think clearer than ever, its in our interest and theirs, but we do
have to do it jointly.
Much of the companys fourth-quarter losses were directly related to the cost of restructuring
its operations, including the mothballing of factories and outlays to cover the separation
agreements for 12,000 workers being laid off in the companys European operations. GM also
took a $2.3 billion charge for the health care and pension costs of its 34,000 former employees
at Delphi Corp., which GM spun off in 1999. GM warned that its financial results may be
revised before mid-March on any changes in Delphi costswhich are still being negotiated
with Delphi and the UAW, and could be as high as $12 billion. Its losses might also increase
as a result of an internal investigation into how it booked some credits with its former parts
supplier. GM is currently under investigation by the US Securities and Exchange Commission
and recently acknowledged that it overstated its 2001 earnings by $400 million.
Earlier this week, Las Vegas casino and MGM movie mogul Kirk Kerkorian raised his stake
in GM to 9.9 percent, in a move analysts say signaled that GM executives have embraced the
billionaire investors demands for the turnaround of the company through huge job cuts,
slashing the wages and benefits of white- and blue-collar workers, and other cost-cutting
measures. We believe that Kerkorians presence has ratcheted up pressure on GM
management to restructure the business, Merrill Lynch analyst John Murphy said in a report
to investors Thursday. Regardless of what Kerkorian does, we believe that things are going to
get worse before they get better, Murphy added. There has been widespread speculation that
Kerkorian has been planning to take advantage of the failing auto companys situation to buy
GM at a fire sale price. Analysts say he would then sell off the companys most profitable
assets, such as the GMAC financing arm, and push the car companyalong with its pension
and health care obligationsinto bankruptcy, allowing him to walk away with billions.

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 CHAPTER 2: CASE ANALYSIS

2.1 PROBLEMS AND CHALLENGES

2.1.1 Problems
Problem 1: High Health Care and Retirement Expenses
By the end of 2005, $5.6 billion to be paid out for the expenses
Holding the Legacy Cost
Problem 2: Decline in Global and U.S. Market Share
Continued decline in global and U.S. market share
Cash drain out will then affect to GMs liquidity status within five years.
Current U.S. market share is 25.6% but the threshold is 25%.

Fig 2.1: Decline in Global and U.S. Market Share, and GMs Cash Flow.

2.1.2 Challenges
Challenge 1: Chinese Market Expansion
Due to a significant increase in market share in China
To capture and dominate the market, GM has to move and move quickly.
Challenge 2: Alternative Vehicle Development
Due to an increase in gas price, and environmental and pollution concerns
Hybrid car and Hydrogen car
Challenge 3: Competitive Advantage Revival
Due to intensity of competitive rivalry and threats from potential competitors
To regain competitive advantages
Challenge 4: Environmental Friendliness
Due to a trend of customer environmental concerns
A long term challenge to create another source of competitive advantages

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2.2 ENVIRONMENTAL ANALYSIS
2.2.1 External Environment Analysis
External environment analysis is conducted on three major environments (remote, industry,
and operating environment) from the basis of the opportunities and threats that GM faces in its
competitive environment.
2.2.1.1 Remote Environment
The remote environment comprises factors that originate beyond, and usually irrespective of
GMs operating situation:
i. Economic Factors
An increase in gas prices
An increase in a health care trend rate
ii. Social Factor
A change in lifestyle to concern more about environment
iii. Technological Factor
Alternative vehicles for alternative energies (Hybrid and Hydrogen car)
iv. Ecological Factors
Global warming concern
Eco-efficient
Remote Environment Factors

Factors Opportunity Threat

Economic
An increase in gas prices -
An increase in a health care trend rate -
Social
A change in lifestyle to concern more about -
environment
Political
N/A - -
Technological
Hybrid car and Hydrogen car technologies -
Ecological Factors
Global warming concern -
Eco-efficient -

Table 2.1: Remote Environment Factors

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2.2.1.2 Industry Environment
GMs industry environment is analyzed by the help of Porters five forces model.
Threat of New Entrants
Mature industry
Reached economies of scale
Very high start-up cost
Hard to access distribution channel
Power of Suppliers
Requires many parts in production
Many suppliers in the industry
Low switching cost
Power of Buyers
Be a significant portion of revenues
Low switching cost
Not being large
Threat of Substitutes
Walking, riding bike, train etc.
cannot compare in usability
Not a new potential trend

Fig 2.2: Forces Driving Industry Competition

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 Intensity of Rivalry
Mature and low growth
High number of competitors
High competition in market share
A lack of differentiation opportunity
Industry Environment Factors

Factors Opportunity Threat

Threat of New Entrants - -

Bargaining Power of Suppliers - -
Bargaining Power of Buyers -
Threat of Substitute Products - -
Intensity of Rivalry among Competitors -

Table 2.2: Industry Environment Factors

2.2.1.3 Operating Environment
GMs operating environment is analyzed as follow:
i. Competitive Position
Cannot compete with the Koreans and Chinese on price.
Also cannot compete the Japanese on quality and the Europeans on performance.
Less effective in R&D spending.
Bad in tracking and collecting customer profiles.
ii. Creditor
Private equity firms and hedge funds are ready to acquire potential companies.
iii. Customer Profiles
A continued expansion in GM market share- China from 2002 to 2004.

Fig 2.3: Continued expansion in GM market

MGT 538: Strategic Case Analysis 6|Page

 Time for "technology generates values" to replace "technology creates demand".

Fig 2.4: Time for technology generates values to replace technology creates demand.
Operating Environment Factors

Factors Opportunity Threat

Competitive Position
R&D advantage position -
Product quality -
Customer profile -
Price competitiveness -
Breadth product line -
Customer Profile
Expansion in China market -
The presence of technology generates value approach -
Suppliers
N/A - -
Creditors
Private equities ready to take over -
Labor Market
N/A - -

Table 2.3: Operating Environment Factors

2.2.2 Internal Environment Analysis

SWOT Analysis
SWOT is an acronym for the internal strengths and weaknesses of a firm, and the environmental
opportunities and threats facing that firm. SWOT analysis is a technique through which
managers create a quick overview of a companys strategic situation
Strengths
1. Large Market Share
Although GMs market share in the US has dropped it is still very much competitive at 26
percent. They also have an increasing share in the Chinese market. With the right decisions
there is no reason for GM to not become the automotive leader it once was.

MGT 538: Strategic Case Analysis 7|Page

2. Global Experience
As explained above even with GMs recent decline they still have the market share and the
experience to bounce back. They have been a worldwide company for nearly a century now
and have established themselves as the global leader for most of them. If you recall, I mentioned
above that a current opportunity for GM is to expand globally and as we can see they already
have the experience to do so. It is just a matter of the correct planning and proper
implementation of those plans that will decided whether or not GMs goals are achieved.
3. Variety of Brand Names
GM as I mentioned has been the automotive leader for the majority of the last century. A large
reason for that is the wide variety of quality brand names that appeal to all target markets. The
current GM brands include: Chevrolet, GMC, Cadillac, Buick, Pontiac, Saturn, Hummer, Saab,
Daewoo, Opel, and Holden.
4. GMAC Customer Financing Program
Since its establishment in 1919 it has proven to be GMs most reliable source of revenue.
5. OnStar Satellite Technology
Developed in 1996 OnStar currently has over 3 million subscribers and is standard on all GM
vehicles. This technology allows the vehicles to be tracked in the event of an emergency or
theft. It also allows the driver and or passengers the ability to communicate with OnStar
personnel at the click of a button.

Weaknesses
1. Behind on Alternative Energy Movement
This is GMs biggest weakness. The alternative energy/hybrid trend has begun to take place in
the automotive industry and GM has been one step behind the competition in terms of
alternative energy vehicles. This has led to many problems including loss of market share and
a decrease in company profit. In order for any automotive company to be successful from this
point forward they must be Hybrid friendly and fuel efficient.
2. Poor Organizational Structure
GMs organizational structure seems to be too vertically integrated. This causes a lack of
communication between employees from top to bottom and may have played a part in GM
falling behind on the alternative energy movement.
3. Stagnant Profitability
Looking at GMs profit we see that they are certainly struggling with respect to the size of their
company. Their profit margin was about 1.5% and the ROE has dramatically decreased over
MGT 538: Strategic Case Analysis 8|Page
the recent years dropping to 10% in 2004.This is a situation that shareholders will not be
pleased with.
4. Overly Dependent on US market
GM has become too dependent on the US market and must take advantage of the opportunity
to expand globally. The competition is becoming too strong to focus on just one country.
5. Overly Dependent on General Motors Acceptance Corporation (GMAC)Financing
GM has become too dependent on its financing program. Granted it is a great strength for GM,
however they once again cannot rely solely on financing in order to turn profit, especially if
they want to compete with Honda and Toyota who are rapidly growing.
6. Poor Credit Status
GMs financial status has like everything else has been gradually decreasing. Their current ratio
is just barely above 1 and their asset test is even lower. Although, I don't see them getting
denied based on their credit at this point, the seriousness of the matter is certainly apparent.

Opportunities
1. Alternative Energy Movement
It is obvious that GM was behind its competition with regards to the research and development
of hybrid vehicles. However, hybrid technology is still very much new giving GM the
opportunity to once again become the automotive industry's leader in innovation and
technology.
2. Continuing to Expand Globally
Recently GM saw an increase in the Chinese automotive market, which proves their needs to
be more emphasis put on foreign markets. If GM can infiltrate these markets and successfully
grow along with their continuing focus on the US market they will be headed in a positive
direction.
3. Low Interest Rates
With the right marketing strategy, the low interest rates have the potential to generate an
immediate increase in sales.
4. Develop New Vehicle Styles and Models
This is an opportunity that will never be satisfied, meaning that GM should always be
attempting to develop the automotive world's most popular vehicles, and as we know, what is
in today will be out tomorrow.

MGT 538: Strategic Case Analysis 9|Page

Threats
1. Rising Fuel Prices
With GM being a large producer in both trucks and SUVs, sales have drastically decreased due
to the lack of fuel efficiency. The rise in fuel prices has played a significant role in creating the
opportunity for development of both hybrid and more fuel efficient vehicles. As you will find
with most threats, an equal opportunity will usually emerge as is the case here with GMs
opportunity mentioned above.
2. Growth of Competitors
GM no longer has the luxury of being the known leader in the automotive industry and faces
the reality that they are in serious trouble. As I mentioned earlier Toyota took the first step in
the direction of hybrid technology and has since drastically grown and become the questionable
automotive frontrunner to start the 21st century.
3. Pension Payouts
Part of this threat is their own doing and the other is simply unavoidable.GM is responsible for
providing generous pension benefits to its employees, which at the time seemed like a great
idea, however they are now experiencing problems as more and more people begin to collect.
4. Increased Health Care Costs
GM, like many large companies with quality employee health care benefits, is experiencing a
large financial hit that only gets worse as time continues.
5. Rising Supply Costs, i.e. Steel
Once again this threat affects the entire automotive industry and forces each company to cut
manufacturing and production costs as much as possible, without taking away from the quality
of the product.

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 CHAPTER 3: STRATEGIC FORMULATION,
IMPLEMENTATION, EVALUATION, AND
CONTROL

3. 1 STRATEGIC FORMULATION
3.1.1 SAFER Framework
The main framework to formulate, evaluate and recommend an appropriate set of strategies
that the organization can use to pursue its staked out position in the industry. [Shawyun, T,
2006]

i. SAFER Framework: Situational Analysis

Strategic Factors Analysis Summary: GM Case
Strategic Factors Source

Global market coverage (six regional areas) Strength

340,000 employees worldwide Strength
Number of plants Strength
Research and Development and technology potential Strength
Production and capacity potential Strength
Decline in global and US market shares Weakness
Inappropriate marketing strategy (push strategy) Weakness
Bad operational practice (capacity over engineering) Weakness
Too much health cost and retirement expenses Weakness
Hybrid car and hydrogen car technologies Opportunity
Expansion in China market Opportunity
Private equities ready to take over Opportunity
An increase in health care trend rate Threat
Intensity of Rivalry among Competitors Threat
Competitor's R&D advantage position Threat
Competitor's product quality Threat
Competitor's customer profile Threat

Table 3.1: SAFER Framework: Situational Analysis.

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ii. SAFER Framework: TOWS Matrix
Opportunities (O)
Hybrid car and hydrogen car
technologies
Expansion in China market
Private equities ready to take
over
Threats (T)
An increase in health care trend
rate
Intensity of Rivalry among
Competitors
Competitor's R&D advantage
position
Competitor's product quality
Competitor's customer profile
Competitive
Advantage
Table 3.1: SAFER Framework: TOWS Matrix
MGT 538: Strategic Case Analysis
Strengths (S)
Global market coverage (six
regional areas)
340,000 employees
worldwide
Number of plants
Research and Development
and technology potential
Production and capacity
potential
SO Strategies
Innovation for Hybrid car and
hydrogen car to serve global
market.
Concentrated Growth in
China.
Legacy Cost
ST Strategies
Turnaround GM's assets
(plants) to make GM
smaller and more
manageable.
Turnaround GM's product
lines to make GM more
compact.
Innovation for continue
being differentiation as
competitive advantage.
Marketing improvement to
pursue changes in customer
profiles.
Weaknesses (W)
Decline in global and US
market shares
Inappropriate marketing
strategy (push strategy)
Bad operational practice
(capacity over engineering)
Too much health cost and
retirement expenses
WO Strategies
Product Development for
US market
Market Development for
global market
Divestiture the financial
sectors to cope with
health care and
retirement expenses.
Bankruptcy declaration to
eliminate health care and
retirement payment.
Renegotiation with union
about health care and
retirement contracts in
the next two years.
WT Strategies
More reasonable incentive
payment to reduce health
care and retirement
expenses, and reflect with
the current situation.
Outsource unimportant
product items to reduce cost.
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iii. SAFER Framework: Quantitative Strategic Planning Matrix
Alternative for a reduction in health care and retirement expense

3.1.2 Recommended Strategies

Turnaround:
General Motors is really close to going bankrupt. Were it not for the federal loan in late 2005
to the tune of a whopping $13.4 billion, GM would have bellied up by now. GM first has to cut
back massively - every non-performing division, every loss-making operation has to be cut.
These are hard decisions. But there is no reason to continue making automobiles that lose
money even before they are shipped! GM knows today what cars make money, and what cars
don't. Start with every car that does not make money, and scale back everything with that car.
This also means that for the cars that are making money today, it may make sense to invest
further in these initiatives. This should give GM some breathing room in future.
Cost Reduction at plants
Reduce overhead cost of over production
Better utilize R&D budget
More focus on core points

Innovation:
GM must innovate. GM has to go back to the drawing board. After all, this is the company that
made automobiles mainstream using the assembly line. GM must make products that matter to
today's consumer. This means taking a page out of Apple's innovation strategy: Make cool
cutting-edge advanced technology products that sticks, create the cool marketing and cool

MGT 538: Strategic Case Analysis 13 | P a g e

brand that resonates with young buyers, provide excellent customer service and experience that
matters, capture the emerging landscape of demand and trends such as hybrids and alternative
energy, and execute! GM has to capture the imagination of the young buyer in the twenties and
thirties. GM has to be appealing and sexy to these buyers. GM has to become a brand that is
fresh and modern.
Maximize R&D technologies and experience
Seek differentiation
Head to new technology emergences
Stay in product leader.

Concentrated Growth:
A concentrated growth strategy involves focusing on increasing market share in existing
markets. This strategy is also sometimes called a concentration or market dominance strategy.
In a stable environment where demand is growing, concentrated growth is a low risk strategy.
GM can pursue growth in China to capture profit from the fastest growth market and Reduce
risk in U.S. market dependency.
Pursue growth in China
Capture profit from the fastest growth market
Reduce risk in U.S. market dependency

Product Development:
GM has to produce diversified products that can add value to the potential customers and
provide greater competitive advantage over the rivals in existing market. Seeking increase sales
by improving or modifying present product. GM production units design, manufacture and
market vehicles under the following brands: Alpheon, Baojun, Buick, Cadillac, Chevrolet,
Daewoo, Jiefang and Wuling. In North America, GM manufacturers and markets the following
brands: Buick, Cadillac, Chevrolet and GMC. Outside North America, GM manufactures and
markets the following brands: Buick, Cadillac, Chevrolet, GMC, Holden, Opel and Vauxhall.
Apply to the mature U.S. market
Add on differentiation to existing products
Generate more demand from the market

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Market Development:
GM must go all out, and conquer this segment of the market outright. Easier said than done,
but GM must out-market the competition in this segment, and do so profitably. A fine line
indeed.
Apply to global markets (EU, ME, and AP)
Continue capturing profits
Identify new target markets
Have more reliable customer profiles
Better collaborate with R&D production
Increase customer demand and satisfaction

Outsourcing:
By adopting outsourcing strategy GM can control capital costs, increase efficiency, reduce
labor costs, start new projects quickly, focus on your core business, level the playing field,
reduce risk.
Focus one core competencies of the brand
Reduce cost
Gain advantages from excellent suppliers
Have more focus on core competencies

Restructuring of Employee Benefit:

GM has to renegotiate with union and restructure it
Better control labor cost
Reduce operating cost
Reduce legacy cost

Defensive Strategies
The adage, the best offense is a good defense is often used in many endeavors.
Unfortunately, in strategic planning many solely concentrate on using offensive competitive
moves. They fail to utilize the strategic benefits of defensive strategies in achieving the goal.
Defensive moves are part of competitive strategies. As in war, as in sport, as in the game of
chess, business defensive strategies are critical. Along with offensive strategies, defensive
strategies allow the organization to move in various directions (forward, backward, and
sideways). Four critically important defensive strategies that Gm using at this time includes:
MGT 538: Strategic Case Analysis 15 | P a g e
 Signaling GM warning the enemy not to enter the market with the objective to obtain
victory without a fight. This is simply by issuing new alerts of changing prices, which
potential competitors feel that they would have difficulty to meet the challenge at a
profit.
Entry (fixed and mobile) barriers-GM is creating lot of obstacles to make it difficult to
overcome, which discourages potential competitors from entering the market segment
like McDonalds frequently introduce a range of new meals to protect its position, Gm
is also on the same pattern by introducing new models in the market.
Pre-emptive strikeGM is taking aggressive action before competitors realize what
had happened. To protect its position in the auto Mobile industry, e.g. Gm has
introduced Hybrid and Electric cars in USA, Uk and EU.
Holding the groundGm is allowing its competitors to enter, then actively competing
with them in order to maintain market position, because Gm has SCA (Sustainable
Competitive Advantage) and a proponent amount of market shares especially in EU
market.

3.2 STRATEGY IMPLEMENTATION

Strategic implementation: short-term objective, functional tactic, outsource, etc.
3.2.1 Strategy Implementation in Organizational Structure
Corporate Strategies
Conglomerate: Operate in multi-business: automotive and financial.
Globalization: Continue operating in global environment.
Growth: Pursue growth in both business lines.
Turnaround: Drop out some less important plants around the world.
Outsourcing: Outsource less important parts to other suppliers.

Business Strategies
Broad-Differentiation: Continue with broad- differentiation to serve big range of
markets
Innovation: Global Capitalize on R&D and technology advancement to accelerate
differentiation.
Product Development: Modify existing products to create more demand in the US.
To fight with a mature-start-declining stage in the U.S. market and North America.
Focus on Attribute-oriented rather than Component-oriented.
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 Concentrated Growth: Direct resources to penetrate the fast growth Chinese market.
Market Development: Develop new markets to shift the global market share.

Functional Strategies
i. Production
Engineering Focus: Focus on engineering rather than capacity to be product
leadership and follow the business strategy of innovation.
Value Focus: Design and produce based on the technology creates values to serve
real needs of consumers.
ii. R&D
Value Focus: Do research based on the technology creates values to tackle
consumers behavior change more properly.
iii. Marketing
Customer Orientation: Track and monitor changes in customers behavior and lifestyle
to build better internal customer profiles.
Demand Pull: Change marketing strategy from push to pull to respond to todays
situation
iv. HR
Restructure Benefits: Restructure employee benefits to reduce overhead cost of health
care and retirement plan. The most important for a company, who acts as innovator and
product leader. Development of deep expertise in science and technology, culture, and
skills.

3.2.2 Leadership Practice

The GM follows the managerial approach where the top level management took decision
without concerned of middle and lower level management. And that was a big problem for
proper implementing the organizational strategies. So, the GM will follow the managerial
approach where all levels of managers are participation in decision making process.

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3.2.3 Balanced Scorecard
Balanced Scorecard as a tool for setting, achieving and measuring objectives.
i. The Balanced Scorecard: Learning and Growth Perspective
Learning and Growth Perspective
Objectives Measure
Human Capital
Increase education and Number of employee training
experience of employee in deep functional expertise.
Employee participation in
professional or trade
associations.
Percentage of employees with
advanced degrees.
Enhance team-working skills Number of employee training in
soft skill.
Information Capital
Increase information Percentage of employees who
available for access has this information available to
them.
Increase information capital Percentage of accomplishment
readiness of information technologies and
systems versus needs.
Organizational Capital
Enhance teamwork Number of completed (in time
productivity and budget) co-development
projects.
Number of internal cross-
trained employees
Employee satisfaction Number of employee
feedback
Turnover rate
Empowerment index (number
of managers)
Encourage healthy lifestyle Lost-time accidents
Workers compensation
claims
Injury frequency rates
Percentage of participants to
healthy-promotion initiatives
MGT 538: Strategic Case Analysis
Target
Minimum five courses per
staff per year.
Minimum twice per staff per
year.
15% of employees getting
advanced degrees within
three years.
Minimum five courses per
staff per year.
Reach 90% within three
years.
Minimum 75% in every area.
Increase 10% per year.
Increase 15% per year.
Minimum 75% of employee
involve the survey
Maximum 7% per year
globally
A ratio of manager to
employee decreases 5% per
year for five consecutive
years
Decrease 10% per year
Decrease 10% per year
Decrease 10% per year
Reach 70% within three
years
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ii. The Balanced Scorecard: Internal Processes Perspective
Internal Processes Perspective
Objectives Measure Target
Operational Management Processes
Decrease operating cost Inventory turnover Decrease 5% per year
Planning accuracy Maximum 15% of effort, cost
Outsourced parts cost and schedule deviations
Labor cost Decrease to 15% comparing
with a current expense within
two years
Decrease 4% per year due to a
restructure of employee benefits
Increase quality On-time delivery rate Reach 90% within two years
Defect percentage Maximum 0.05% per
Warranty claims part/model
Maximum 0.05% per
part/model
Innovation Processes
Increase a success in Dollars spent on research
Increase the R&D/sales ratio to
innovative projects and development 6% in two years
Employee hours on Minimum 30 hours per week for
research and development R&D staff and minimum two
Number of new projects hours per week for other Staff
or services introduced At least two new innovative
Number of new product products or services introduced
joint ventures per years regionally (e.g. product
New product or service safety, customer health and
cycle time environmental impacts)
Revenue from new Minimum two new projects per
products or services year for each region
Maximum three years before
replacement
Increase 10% each year
Accelerate innovative Number of new products In each region, at least two new
projects or services in the pipeline products or services being
Time to market of new progress concurrently at all time
products and services (e.g. hybrid and hydrogen car)
Faster by 10% each year
Regulatory and Social Processes
Emphasize Corporate Social Dollars spent on CSR Increase 5% per year
Responsibility (CSR) Number of CSR activities At least 12 activities per year
activities per region

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 Customer Management Processes
Better understanding of Number of customer
customer needs profile produced
Number of lead user
utilization
Enhance retaining customers Percentage of returned
rate customers
Deepen customer relationship Revenue from cross-selling
multiple products and
services
iii. The Balanced Scorecard: Customer Perspective
Customer Perspective
Objectives Measure
Create brand and technology Number of ads launched
awareness and recognition per region
Number of trade show
attended
Increase customer Number of customer
satisfaction and loyalty level complaint
Number of complaints
resolved the first time
Customer response time
Number of proposals made
Increase number of Total number of customers
customers Retention rate
New customer acquisition
numbers
Global market share
U.S. market share
Chinese market share
MGT 538: Strategic Case Analysis
Minimum five new customer
profiles produced regionally
90% of overall projects
conduct lead user within
three years
Grow 5% per year
Increase 10% per year
Target
Increase 20% in three years, 8%
annually
At least one per region
semiannually
Reduce 25% each year
Increase 15% each year
Reduce 50% in three years, 20%
annually
Minimum two proposals per
year per region
Increase 15% in three years, 6%
annually
Increase 10% in three years, 4%
annually
Increase 10% in three years, 4%
annually
Reach 18% in three years,
increase 1.5% annually
Reach 27.5% in three years,
increase 1.2% annually
Reach 15% in three years,
increase 4% per year
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iv. The Balanced Scorecard: Financial Perspective
Financial Perspective
Objectives
Increase profitability
Increase shareholder
satisfaction
Measure Target
Annual revenue Increase 10% each year
Annual revenue from new Increase 35% each year
products Increase to 15% in three years
Gross profit margin from Increase 20% in three years,
new product 10% annually
Return on Investment
(ROI)
Share price Increase 75% in one year, then
Dividend payout increase 7% annually
Increase 10% annually

3.3 STRATEGIC EVALUATION AND CONTROL

The Evaluation and Control Process
Monthly progress review and quarterly comprehensive review

Fig 3.1: Strategic Evaluation and Control Process

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 CHAPTER 4: RECOMMENDATIONS AND
CONCLUSION

4.1 RECOMMENDATIONS
1. GM motors should strive harder to develop and lead new technology as per their
company agenda.
2. The company has to take bold steps to conquer new markets.
3. When it comes to competition the company should work hard on remodeling by
keeping the idea in mind of new emerging markets.
4. The company should take a more professional look on their portfolio and should drop
the investments which are outdated.
5. Analysis of potential synergies within brands and corporate organization and market
research to determine market segments for each remaining brand to target.
6. Formulation of tactical and strategic decisions to be implemented.
7. Develop yearly goals, new corporate vision and mission.
8. Invest heavily in to R&D for new designs.
9. Develop new concepts for vehicles within each brand and begin marketing.
10. Develop long term supply chain arrangements.
11. Monitor transitional period from old to new organizational structure.
12. Begin fixed investments in specialized assets required for future vehicles.
13. Continuous quality control and customer feedback.

4.2 CONCLUSION
97 years of experience, the 5th of Fortune Global 500 company to become a struggling one.
There is a list of problems to overcome before being acquired by investors. For health care and
retirement expenses, GM to trade off of money for employee satisfaction to keep the operation
running. Fortunately, its strengths and potential opportunities would help GM to stabilize its
status and then strike back with better understanding in customers and technologies.

MGT 538: Strategic Case Analysis 22 | P a g e

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