Chapter 5 : Planning : The Foundation of Successful Management Management in Action
Will GM’s Strategic Plan Lead to Future Success?
Question 2 : Based on the case, what is GM’s vision? Do you think it is realistic? Explain.
GM’s vision include making more than $10 billion a year and to raise it’s profit margin to 10%. I think it is realistic. It already is headed in that direction. On Feb. 16 2012, GM is likely to report 2011 net income of about $8 billion, its highest ever, according to people who have seen the figures. Behind the gain to nearly twice 2010’s $4.7 billion are growth in China and strong profits in North America, where GM has shed billions of dollars of costs and lately has been able to command higher prices. GM has loftier ambitions still. It aims over the next several years to raise its profit margin – the portion of revenue left after paying expenses – to 10%, Daniel Ammann, chief financial officer, said in an interview. That would be a significant jump from the current margin of about 6% and would be among the highest in the auto industry. Our goal is fewer auto “platform”. GM aims to build vehicles all over the world that are made from the same basic parts and assembled in plants that use the same type of tooling – thus wringing savings out of its massive engineering budget. GM in 2010 had 30 auto platforms. It aims to reduce this total to 24 by 2014 and to 14 by 2018. According to GM executives, achieving a healthier margin is becoming the company’s main focus. For salaried executives, for example, annual bonuses are based largely on the company’s margin. Recently, when GM released global sales figures showing it had regained from Toyota the title world’s largest auto maker, Mr. Akerson was asked about his feelings on reclaiming the crown. GM, he replied, needs to focus “on profits and margins and not necessarily try to post numbers on the board.”
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