Running head: Strategic Plan
Strategic Plan (General Motors)
MBA580
University of Phoenix
Executive Summary
General Motors (GM) has been a leader in the auto industry which over the past few
decades has continued to lose market share to foreign competition. The current weak U.S.
economy combined with rising fuel prices and increased political pressures regarding
global warming, presents several challenges to GM and the entire auto industry. These
current challenges provide exciting opportunities for the auto company who can quickly
develop and produce alternative fueled vehicles. The global auto industry will continue to
grow with 80% of the global auto industrys growth from now until 2012 is expected to
come from emerging markets. However, for GM to succeed they will need to address
several internal issues regarding legacy costs, unions, and the development of a wide range
of alternative vehicles that consumers deem are must have vehicles.
Looking to the future GM has a global presence in these critical emerging markets, and
have the knowledge and expertise in alternative vehicle technologies required to move the
company forward. For GM to achieve the vision of being synonymous with alternative
vehicles (fuel celled hybrid, ethanol, and electric / battery). When consumers think of the
innovative technology in the auto industry they think of GM! For this to happen GM can
no longer be a quick follower, but must be an industry leader in technological advances in
the auto industry. GM must offer a variety of alternative vehicles that meet consumer
demands and government regulations.
GM has significant fixed costs and large capital investment needs, so cash flow is the
lifeblood and should be considered in every decision which could impact our expenses or
require a capital investment. By 2010, GM expects to reduce structural cost as a percent of
revenue to only 25%, and by 2012 to only 23%; these would be considered benchmark
levels of cost.
GM reduced its structural cost by $9 billion in GMNA between 2005 and 2007, and these
cost reductions will need to continue to fund the research, development, and production of
alternative vehicles. Also important are GMs efforts to grow revenue in emerging markets,
while at the same time being as efficient as possible in managing GMs structural cost base
to support this growth. The global auto industry market is growing, and the opportunity for
GM to recapture market share lost in the past few decades is there for the taking. GM can
win, and to do so needs to expedite change to meet the challenges and seize opportunities.
Company Background:
General Motors Corp. (NYSE: GM), the worlds largest automaker, has been the annual
global industry sales leader for 77 years. Founded in 1908, GM today employs about
266,000 people around the world. With global headquarters in Detroit, GM manufactures
its cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were
sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo,
Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. (GM.COM web
site)
GM needs a sense of urgency regarding revising a strategic plan that incorporates the next
generation of vehicles. In todays global economy and highly competitive auto industry GM
has no time to procrastinate. As stated so clearly by Dean Harlow, GM has just too much at
risk in not becoming an industry leader in alternative fuel technology. Fuel-economy
legislation is sparking the race, Dean Harlow, president of engineering firm Ricardo Inc.,
said last week at the Automotive News World Congress. “Just as Kennedy pushed NASA
to the moon in a decade, Washington has now thrown down the gauntlet for the auto
industry,” said Harlow. He was a member of a panel discussing the risks and opportunities
of “green technologies.” “Were in a race for eco-innovation,” he said. But without more
investment, alternative vehicle technologies and development of hydrogen-powered cars
will leave the United States, the head of General Motors fuel cell activities warned. Other
countries are investing heavily in green technologies and could surpass the United States,
GM scientist Byron McCormick said. “There is a real chance that could happen. If that
happens, what happens to the jobs, to the learning and the skills that go with it?” (Allen,
2008) This is a critical time in auto industry with many threats, but opportunities as well.
The next several years will redefine GM, but what will they become?
Vision Statement:
The GM vision is as follows: GMs vision is to be the world leader in transportation
products and related services. GM will earn customers enthusiasm through continuous
improvement driven by the integrity, teamwork and innovation of GM people. (GM.com)
The proposed new vision for GM is as follows: For GM to become the automotive industry
leader in alternative fueled vehicles and providing superior quality products that global
consumers call to mind when they think of quality and innovation. (For example, the way
consumers call tissue, Kleenex, or the way consumers reference quality — Rolex to
watches) My vision for GM is to be the industry leader in innovation, and where all other
industry competition strives to imitate.
Mission Statement:
The current GM mission statements are as follows: Drive improvements in market share,
revenue, brands, people, responsiveness, and cost effectiveness through the
implementation of global common metrics and best practice sharing. The new proposed
mission statement will be as follows: GM will become an industry leader, not a follower.
To regain lost market share that was lost to foreign competition, and once again be the auto
industry leader in sales and market share in todays global market.
Values Statement
The auto industry just like the global economy is going through tremendous change, due to
rising fuel prices, and environmental worries, such as global warming. GM must use these
threats as opportunities, and take advantage of changing consumer buying habits. GM
needs to change consumer perception of the company, from a stodgy, poor quality, vehicles
to innovative, quality, and environmentally friendly company. To do this GM must portray
an image that states that GM values what the consumer wants and what the environment
needs. Listen to what consumers are saying directly and indirectly about GMs current
products, and create innovative, green, vehicles that turn consumers into customers. At the
same time provide GM stakeholders pride and financial incentives to remain with GM.
The following chart provides an analysis of the anticipated behaviors resulting from
exhibiting the companys stated values. In addition, the chart provides insight into how the
anticipated behaviors will help support the firms chosen grand strategies: concentric
diversification and turnaround.
Values Analysis
Value Customer / Stakeholder benefits How it Supports GMs Grand Strategies: Innovative
technologies leads to alternative fuel champion
Industry best customer experience Focusing on achieving high levels of customer
satisfaction: Customer: providing innovative products that provide customer choices in
alternative fueled vehicles. GM stakeholders will receive increased profits via increased
sales and market share. Innovative Leader: Offering customer a wide range of products
that meet individual customer demands. When consumers think of electric, hybrid, or fuel
cell, GM will be their first choice.
Innovative, Quality Products Producing and marketing must have products that are not
only innovative, by visually appealing and with the highest industry quality. This in turn
will create customer loyalty, and provide stakeholders with pride in their association with
GM. Turnaround: This strategy will separate GM from all other auto industry companies.
Leaving the industry to play seconds to GMs innovative lead.
Going Green Environmental friendly Providing environmentally friendly vehicles will
have a positive impact on consumer perception of GM, and the GM stakeholders will feel
good about doing the right thing regarding the environment. Turnaround: By reducing
expenditures through shortening job completion timeframes the employee will be helping
KS to attain higher profits * resources that can be reinvested in recovery activities
designed to improve the companys competitive position.
Concentric Diversification: This will take a significant financial investment, as well as
tough market penetration. However, GM should experience a short ROI, due to reduced
product platforms (cost reductions), and increased market share by mass producing green
vehicles.
Environmental Analysis
Strategic Imperatives:
In creating an effective strategy for General Motors (GM), GMs external environment was
scanned to identify multiple opportunities for and threats against the company (strategic
imperatives) for the next several years. In addition, GMs internal environment was
analyzed to determine current strengths and weaknesses. GM and the entire auto industry
are currently challenged with the perfect storm. The auto industry is being hit by a weak
US and global economy, rising fuel prices, and social and political environmental concerns
and issues. In order to overcome these potential threat, GM should consider mass
producing a range of alternative fueled vehicles (fuel cell, electric, and hybrid). As
emerging markets develop they will increase their use of oil products creating even greater
demand and increased prices. Couple this issue with social and political concerns
regarding global warming, and the ever increasing state regulations regarding emissions,
will create a potential huge customer demand for these alternative vehicles.
Potential opportunities identified for GM are related to the future demand of the alternative
vehicles and increased global market share potential from emerging markets. But first GM
needs to turn current internal weaknesses into strengths to achieve the external
